Liquidating Assets During A Divorce

What are the dangers associated with the liquidation and trading of assets in a divorce proceeding?

One thing that many people find difficult about divorce is the effect it often has on their finances.  You might come out of a marriage in a totally different financial situation than you were in before.  Fortunately, an experienced divorce attorney can help you reduce the impact that a dissolution of marriage has on your overall financial picture.

Arizona is a community property state.  This means that all of the property acquired by a couple during the marriage is considered to be owned by both spouses.  Only property acquired before or after a marriage or designated as belonging to one spouse is considered separate property. When a marriage ends, the couple and sometimes the court has to decide how the community property will be divided amongst the parties. Sometimes, in order to come to a settlement, assets need to be transferred or liquidated.

If assets need to be liquidated, both parties must think about the implications this liquidation will have.  Liquidation is what is known as a taxable event and therefore proportionate taxes will be assessed.  These transactions can have a major impact on each of the parties’ taxes and future finances.  Also, courts do not always take them into account when deciding whether the settlement is fair.  Therefore, tax consequences should always be considered when making a determination to either liquidate assets or use another option.  

Essentially, the other option is trading assets between spouses to come to a settlement.    Exchanging assets between spouses is not a taxable event and each party can receive what they are entitled to without worrying about the taxes that go along with liquidation.  But, there are other things to consider.  For example, if one spouse agrees to accept the family home as part of the settlement, he or she should determine ahead of time if they can make the monthly payments.  A detailed analysis of the effects of accepting an asset should be done before reaching an agreement. 

The attorneys at Nirenstein Garnice in Scottsdale, Arizona, regularly work with clients to reach a divorce settlement that is beneficial to both of the parties. Call us today at (480) 351-4804 or email us for a free, confidential consultation. 

Arizona Cardinal’s Player Drops Ball in Paternity Suit

Football and fatherhood need not be at odds.  Yet in the wake of Arizona Cardinals running back Jonathan Dwyer’s domestic violence case, another Arizona player is involved in a family law dispute.  After fumbling a court appearance in a paternity suit, Arizona free safety, Tyrann Mathieu, is appealing a ruling that he was the father of a child born in 2013 and owes thousands in child support.

Mathieu, nicknamed “Honey Badger” because of his tenacious defensive play on the field, didn’t show up in court to defend against the paternity claims.  His absence enabled the child’s mother, Megan Edwards, to win a default judgment.  Mathieu is appealing, claiming he did not receive proper notice of the paternity suit, which was brought in New Orleans.  A three-judge panel of the 4th Circuit Court of Appeals will hear the case.

Edwards’ attorney claims that Mathieu was served with papers twice by mail at the Arizona Cardinals’ business address, a post office box in Arizona.  Mathieu’s attorneys argue that this was not proper service.

According to the allegations in the case, Edwards had a six-year monogamous relationship with Mathieu that ended four months before their son was born.  Edwards says a 2014 DNA test proves that Mathieu has 99.99999 percent likelihood of being her child’s father.  She testified that Mathieu acknowledged fathering the child to family, friends, and colleagues, in person and in social media.  Mathieu has also paid a number of visits to the child.

Meanwhile, Mathieu appears to have a fathered another child with the stepdaughter of Arizona Cardinals’ defensive coordinator Todd Bowles.

Edwards says she has spent $3000 on child care for her son, while Mathieu, who has a $3 million contract, provided $1500 on Thanksgiving 2013 and an additional $800 on their son’s birthday.

A New Orleans judge has decreed that Mathieu is the biological father and has ordered him to pay $22,200 in back child support, plus $2,598 in day-care expenses retroactive to the date the suit was filed.  Going forward, she ordered Mathieu to pay $3,700 in monthly child support and $433 in monthly day-care expenses, purchase health insurance covering the child, and buy a life insurance policy with the child as a beneficiary.  Some of the financial support is to be paid into an educational trust fund for the child.  The judge also ordered Edwards to pay for attorney’s fees, court costs, and DNA testing.  

Edwards says she remains open to Mathieu visiting and having a relationship with his son.

Paternity battles can be costly and damaging to the reputations of all parties, and missteps, missed court dates, or the wrong strategy, can make matters worse.  Whichever side of a paternity or child support case you find yourself on, having qualified counsel is essential.  The Scottsdale, Arizona attorneys at Nirenstein Garnice have helped people involved in all forms of domestic relations and family law disputes. Call us today at (480) 351-4804 or email us for a free, confidential consultation.

Surrogate Causing Concern for Arizona Couple

For couples who have fertility issues, a surrogacy arrangement has become a valid option in the United States.  A surrogate carries the child for the couple or individual who cannot.  This person can have a biological relationship to the baby they are carrying, through the donation of an egg.  If the sperm and egg are donated by other people, usually the prospective parents, the surrogate is not genetically related to the child in any sense. Both types of surrogacy can create serious legal issues pertaining to child custody and parental rights.  

Arizona couple, Alan and Alicia Lundgren, wanted a child together after being married, but, Alicia was unable to carry a pregnancy.  A friend of Alicia’s mentioned that she was thinking about becoming a surrogate and the two agreed that she would act in this capacity for the Lundgren’s.  Alicia, Alan and the friend were cleared physically and psychologically by a fertility clinic and were then advised to consult with an attorney.  They entered into a gestational carrier agreement and the couples sperm and egg were used to impregnate the friend.  As part of the friend’s compensation, they allowed her to live in their home, paid for her medical insurance and costs as well as gave her a credit card for personal use.  The Lundgren’s claim that they treated the friend like a member of the family in every sense.

A few months into the pregnancy, the friend began acting strange in relation to medical decisions for her and the baby.  After she was confronted about the strange behavior by the Lundgren’s, she left the home.  They spoke to her for a while and tried to get her to sign an agreement terminating her parental rights, which she refused to do. Then, contact ceased completely. Now, they do not even know where she is or where she will have the baby when the time comes.  A news organization contacted the friend and she stated that she intends to give the baby to the Lundgren’s when it is born but chose to end her relationship with them for other reasons.

Unfortunately, the Lundgren’s do not have a lot of options at this point. Surrogacy agreements are unenforceable in the State of Arizona, even though there are guidelines for them in place.  If a parent has no biological ties to the child, he or she has no legal recourse.  If the parent does have a biological relationship with the child, as in this case, he or she can go to court to enforce their parental rights.  There is no guarantee as to what the court will decide in this type of action.  

If you have a family law issue that you would like to discuss, call the Scottsdale, Arizona area attorneys at Nirenstein Garnice at (480)351-4804 for a consultation today.

Victim of Statutory Rape Owes Child Support

The State of Arizona currently has over 150,000 child support cases pending with the Department of Economic Security.  Many different scenarios can result in a parent’s liability for child support.  Even a parent that conceived a child when they themselves were underage and that was the victim of statutory rape can be responsible for payment.    In Arizona, the state is punishing the victim of statutory rape by holding him accountable for child support payments dating back to when he was a child.  

At 14 years old, Nick Olivas had sex with a 20 year old woman. He claims that he was having a difficult time at home and that the woman took advantage of him.  He did not know that he was a victim of statutory rape at the time and therefore, never pressed charges.  Unbeknownst to Nick, a child resulted from the relations.  Eight years later, he was served with child support papers informing him of the child’s existence for the first time.  Out of fear, he ignored the papers and never went for a paternity test.  The state claimed that he owed over $15,000 in back due child support and eventually began collecting this money by garnishing his wage and assessing interest.

Nick has come to terms with the fact that he is a father and wants to be involved in the child’s life.  But, he does not agree with the states assessment of the child support he owes.  He claims that because he was a teenager when the child was conceived and did not know about her, that he should not be liable for back due payments.  He also argues that because he was a victim of statutory rape that this should mean something.  

Unfortunately for Nick, the courts in many states have disagreed in cases similar to his.  In Kansas and California, the courts have decided that men who were young boys at the time their child was conceived and who were the victims of statutory rape, are nonetheless liable for child support.  The main reason for this seems to be that it is more important to ensure that the child is taken care of and to collect the money that has been given out in public assistance than to protect the rights of the rape victim.  This is in essence making the statutory rape irrelevant.

In Arizona, the laws provide that a parent that was the victim of rape is responsible for child support unless the rapist was convicted of sexual assault.  Many believe that this is a double standard and that there would be uproar if female statutory rape victims were treated this way.  

If you have been served with a demand for child support or are involved in any family law matter call the Scottsdale, Arizona area attorneys Nirenstein Garnice  at (480)351-4804 for a consultation today.

Divorcing in Arizona? Now Is the Time to Start Assessing and Protecting Your Property

Most married couples are aware that marriage is more than an expression of love and commitment. Marriage is also a legal contract that can merge assets, combine debts and blur ownership rights for property that might otherwise be associated with just one of the two spouses. So, when a couple divorces, one or each spouse might have an uncomfortable feeling he or she may soon be only a partial owner of property they once may have had exclusive rights to.

Fortunately, Arizona law allows for both separate and community property within a marriage. This means that a divorcing spouse in our state may be able to retain most or all ownership of a specific property if the property is designated separate property (i.e. separate from the other spouse) because it was:

• Owned by him or her prior to the marriage or was acquired after separation;
• Inherited or received as a gift;
• Received in a lawsuit for compensation for pain and suffering; or
• Designated as separate property by a written marital agreement.

Protecting property rights during divorce via separate-property designation is especially important in Arizona because Arizona is one of just nine community property states as opposed to equitable distribution states. In equitable distribution states, even separate property may be divided unevenly (i.e. possibly to your advantage) based on various circumstances. In community property states like ours, though, all non-separate property is generally divided in half, even if one spouse has strong reason to believe it should not be.

If you are divorcing in Arizona and would like to retain as much property as possible following the completion of your divorce, contact a skilled divorce attorney at Nirenstein Garnice in Scottsdale for answers and qualified legal help. We can work to demonstrate that your house, land, investment fund, savings account, business or other property is designated as your separate property and that your full claim to property is not diluted due to issues such as property comingling. To contact us for a free consultation, call (480)351-4804.

Lawmaker’s Arizona Divorce Highlights Disclosure Risks

An unusual recent case highlights a risk that couples should be aware of when considering divorce—the disclosure of potentially embarrassing personal information.  During her divorce proceedings, State Legislator Michelle Ugenti claimed legislative privilege and attorney client privilege to prevent Verizon from handing over several months of text messages to her husband.  Her husband’s lawyer had attempted to subpoena the records, most likely to try demonstrating that Ugenti was having an affair.

Ugenti’s lawyers claimed that the texts were irrelevant under Arizona family law and that they were privileged communications.  The husband withdrew his request before a court could decide.

However the judge might have ruled, the case is a useful illustration of how damaging the discovery process can be during the dissolution of a marriage.  The parties may use any weapon they can find to gain leverage in negotiations or simply humiliate each other.

Arizona family law requires the parties to file a detailed “resolution statement” packed with information needed to terminate a marriage fairly.  They have to complete an Affidavit of Financial Information with proof of income, including tax returns and financial records related to wages and investments.  They have to document a wide variety of expenses, including medical, childcare, and education costs.  They also have to make full disclosure of assets and indebtedness.  All of these are minimum requirements in most cases.

Further, each party can submit “interrogatories” —written requests for information.  They can also submit a “request for production” of certain documents.  Or a “request for admission” — a statement which the receiving spouse must admit to, deny, or object to.  Some requests may be reasonable, but others may be an attempt to expose secrets and harass the other side.  A court may have to rule on whether a request is legitimate.

In an amicable divorce, the discovery process can be complex and daunting.  In a contested divorce, it is often a battleground.  In either case, the information uncovered can have a lasting impact on spousal maintenance, child custody and support, and division of marital property. 

Before moving forward with a petition for divorce, you should be fully prepared for the disclosures that will ensue.  An experienced family law attorney can guide you on how much information to provide, how much to seek, and how to handle probing interrogatories and requests.  We’ve provided family law help in Arizona for more than 24 years.  For answers to divorce, separation, and property distribution questions in the Scottsdale, Arizona area, call us at (480) 351-4804 or email us for a free, confidential consultation. 

Factors Considered in Arizona Child Custody Proceedings

Divorce is a complicated, long and expensive process that can involve many uncertainties.  For those people with children, when faced with a divorce, one concern might be which spouse will get custody.  In the State of Arizona, child custody is referred to as legal decision making and includes the right to make decisions relating to a child’s personal care, health care, education and all other non-emergency matters.  State law allows separating and divorcing parents to decide which parent will retain legal decision making and how parenting time will be divided.  If the couples cannot decide and the courts become involved, the courts will make the decision for them.  The courts do not just pick the parent they like the best.  They are obligated to consider many different factors when making their decision.

All legal decision making issues are decided according to the best interests of the child standard.  As part of this standard, the courts must consider certain factors relating to the child.  They must consider the relationship between the child and each parent.  They have to contemplate the current relationship, as well as the past and future relationships, between parent and child.  The courts must look at the interactions between the child and each parent, as well as siblings, if any exist.  The courts will also consider how well-adjusted the child is to home, school and the community they reside in.  If the child is old enough, they can consider the child’s wishes as well.

The courts will then turn their attention to the parents.  They will consider which parent is more likely to foster a relationship between the child and the non-custodial parent.  This factor is only used in cases where domestic violence and child abuse are not present.  Therefore, the courts must inquire as to whether domestic violence or child abuse was present within the family.  The courts then look to the parent’s behavior.  For example, did they delay litigation or run up costs in bad faith? Did they falsely accuse the other parent of child abuse? Have they engaged in coercion or duress to get the other parent to agree to the legal decision making agreement? Have they complied with the mandatory divorce education program provided by the court?

Arizona courts take all of the above factors into consideration when deciding which parent is best suited to care for the child subsequent to divorce.  Dealing with a child custody issue is not easy.  It is imperative that you have a qualified attorney to protect your rights.  If you are going through a divorce and have questions or concerns, call Arizona family law attorneys Nirenstein Garnice at (480)351-4804.  

Preparing Your Finances for Divorce

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.

Increase in Women Paying Child and Spousal Support

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.

Postnuptial Agreements: When Should They Be Used and Why?

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.