Before You Agree to a Divorce Settlement, Consider These Issues

How might my credit be affected by my divorce?

If you have tried a “do it yourself” divorce agreement, you likely found yourself on a mine field of legal and financial issues. Should you step on one of those mines, the financial damage could be serious. Here are issues you need to consider, with the help of one of our experienced divorce attorneys, regarding assets and debts when agreeing to a settlement in your divorce.

First, consider the nature of assets. If an asset is “liquid,” that means it is easy to get its cash value, such as a bank account. Real estate is “illiquid” because it can be difficult to convert its cash value. If, on balance, the assets that each spouse will get are about the same, it may appear to be an equitable decision. But if one side’s assets are largely illiquid, cash may be needed to maintain them (like paying for insurance and taxes) but in short supply. Converting these assets to cash will involve cost and time so what looked like a fair deal actually is not.

Second, consider taxes. Different assets are taxed differently so the value may appear to be good, but the cost in taxes may be bad. The effect of your settlement on various taxes can be very costly if not addressed properly. Capital gains, income tax and alimony are some areas impacted by taxes.

If a big part of the settlement involves retirement assets, there are many tax issues and possible penalties. Under normal circumstances, distributions from a retirement plan before age 59 1/2 are considered “early distributions” and subject to a 10 percent penalty tax and the ordinary income tax. A transfer to an ex-spouse as part of a divorce settlement is an exception. Income taxes still apply, so any assets from a “qualified plan,” like a 401(k), will be subject to a mandatory 20 percent tax withholding. To avoid this, the transfer needs to be made directly to another retirement account, such as an IRA.

Third, consider debt and credit scores. Don’t start off your new life with a bad credit score. Get a copy of your credit report. It should show all joint accounts, accounts you may be unaware of and potential credit problems. Pay off and close all joint accounts prior to the divorce settlement. Open new accounts in your own name. 
Though a separation agreement may divide responsibility for joint debt, it has no effect on the creditor. Each person is liable for the full amount of debt until the balance is paid, whether married or not.

The experienced family law attorneys at Nirenstein Garnice PLLC serve clients in the Scottsdale, Arizona, area. We can help you reach a fair and equitable divorce settlement. Call us today at (480)351-4804 for a free consultation.

Divorce for Same Sex Couples

Is There Same Sex Divorce in Arizona?

In October a federal judge struck down Arizona’s ban on gay marriage and now same sex marriages are legally recognized in the state. U.S. District Judge John Sedwick’s decision barred enforcement of a 1996 state law and a 2008 voter approved state constitutional amendment outlawing gay marriage.

Sedwick’s decision was issued after the 9th Circuit Court of Appeals (which covers Arizona) ruled that gay marriage bans in Nevada and Idaho violated equal protection rights guaranteed in the U.S. constitution of same-sex couples. Last October the U.S. Supreme Court decided not to hear appeals from several states trying unsuccessfully to enforce their bans on same sex marriage.

With same sex marriage becoming legal and recognized in Arizona, same sex married couples have all the rights and obligations to each other, and any children born to the couple, as heterosexual couples, which includes the ability to get a divorce.

Given the decision came down in October and Arizona requires that one party must live in the state for at least 90 days prior to filing for divorce, it may take a while for Arizona’s first same sex divorce case to be filed.

Because this would be new legal territory, many issues need to be worked out. Same sex marriages are recognized in 35 states, either due to court decisions or legislation. A same sex couple married in Arizona, but that moves to one of the 15 states where the marriage is not recognized, may need to move again to a state that does recognize these marriages and establish residency before filing for a divorce.

If you are in the Scottsdale, Arizona, area and are thinking about or planning to get divorced, contact the divorce and family law attorneys at Nirenstein Garnice today by calling (480)351-4804 for a consultation.

Now is the Winter of Our Discontent

Now is the winter of our discontent was a line penned by Shakespeare and spoken by Richard III to open the play of the same name. Though he was speaking of his good fortune, for many married couples winter is the season of their marital discontent and the time to file for a divorce. The number of divorce filings is normally high from January to March.

Why is this supposedly happy holiday period the launching pad for many divorces?  Spouses may decide to have one last holiday season together or the stress of a bad relationship along with being surrounded by family members during the holidays may be the straw breaking the camel’s back.  If children are involved, delaying the filing to January allows children to have one last Christmas with married parents. January is the busiest month for bankruptcy filings, evidence of the financial problems that frequently break up couples. In addition, an unappreciated spouse suffering through another Valentine’s Day may have decided he or she has had enough.
Filing after New Year’s Day can have some financial benefits.  For example, one spouse may be due an end-of-the-year bonus from work, money the other spouse can add to the overall financial picture.  Also, for tax purposes the couple’s finances would be fixed for the entire preceding 12 months. This makes the division of assets much easier to calculate once the divorce process begins.

February is usually the high point in divorce filings, according to CNN. They report a study of divorce filings in New York, Illinois and California which found that February is the busiest month of the year for divorce filings as numbers are usually up about 18% from the average month at this time each year. 

A divorce may come as a surprise to a spouse, no matter when it’s filed. If that happens to you: 

• Control your emotions and maintain an even temper;
• Don’t blow up in a rage and say or do something you will regret;
• Stay cool, calm and collected; and 
• Start making your own divorce preparations.

If you are not the one in control, or do not have a good understanding, of your family’s finances, start obtaining files and information that can give you a grip on your family’s money matters. 

If you live in the Scottsdale, Arizona, area and have decided that 2014 is the last year you want to be married, the attorneys at Nirenstein Garnice can explain divorce law and the process involved in dissolving your marriage. Call us at (480)351-4804 for a confidential consultation today.

Social Media Postings Can be Used as Evidence in Divorce Cases

People reveal some of their innermost thoughts and feelings on social media, not realizing who may read them and how words and photos posted could be used in legal proceedings. One of the first thing attorneys and their staff members do in preparing for a divorce is to review the social media postings of their client and his or her spouse. Those postings could be of no help or could be critical in a divorce proceeding.

With an estimated 65% of adults using social media and 89% of those under 30 using it, the internet is a fertile field to harvest information, photos and videos, potentially showing an individual’s state of mind, validation and corroboration of communication and other evidence. These posts can show the who, what, where, why and when concerning a wide range of relevant events. Fears of infidelity could be confirmed, a party’s income and spending could be illustrated and one spouse’s feelings towards the other can literally be quoted from websites.

It’s not just the content that can be helpful. There is contact information, a list of networked of friends (and possible witnesses), locations, daily routines and interests also available for viewing. 

If you are considering getting divorced, you should consider stopping the use social media. If you feel the need to continue to use it, remember that what you post could be read by your spouse’s attorney. 

Do not delete any postings. If you are expecting possible litigation this could be interpreted as destruction of evidence and you could be sanctioned by a trial judge. If your spouse has posted incriminating information, photos or videos, download and copy them in case your spouse tries to delete his or her postings.

If you are considering getting a divorce and have questions about legal issues and how evidence is used during the legal process, contact the Scottsdale, Arizona family law attorneys at Nirenstein Garnice by calling (480)351-4804 for a consultation today.

When Is A Non-Modifiable Divorce Modifiable? When One of the Parties Lies

In Arizona, the parties to a divorce can agree that, in the future, a dissolution decree cannot be modified.  By statute, a court cannot alter a separation agreement that prohibits future modifications.  But there is an exception—when one of the parties lies or withholds information from the court.

Nancy S. McNeil petitioned husband Robert Hoskyns for dissolution of marriage in 2005, and he agreed to pay her $5000 monthly in temporary child and spousal support.  Because of a mistake involving automatic bank transfers, however, he began unwittingly paying her twice that amount. McNeil knew she was being overpaid, but never told her husband.

In 2007, at the trial for their marital dissolution, the parties agreed that Hoskyns would continue to pay $5000 per month for six years, an amount that could not be modified or terminated.  The court specifically asked the parties if there were any payments outstanding.  McNeil said he still owed $2500.  His wife said nothing about the fact that, because of duplicate payments, he had actually overpaid $85,000.  The overpayments continued, but McNeil still did not tell her husband or the court.

Two years later, McNeil filed a Petition to Enforce Spousal Maintenance claiming that her husband owed her $14,000.  At the time, she knew he had paid her far more than he owed.  A court-ordered accounting finally revealed the overpayment, and Hoskyns asked for relief.  His wife, however, then claimed he owed $49,000 in arrears.  She also threatened to try to have his dentist’s license revoked and filed a petition for contempt that resulted in her husband being briefly jailed.

After a series of hearings, the court decided that McNeil had committed fraud on the court on three occasions.  The court vacated all previous orders requiring Hoskyns to pay arrears, terminated his obligation to pay further support, and fined his ex-wife $5000 for “repeated fraud and misrepresentations.”  

She appealed the termination of support, claiming that, by statute, the court could not change a decree that was non-modifiable and non-terminable. The Arizona Court of Appeals upheld the lower court’s order, however, saying that the statute did not apply when there was fraud on the court. 

In divorce, it is common for the parties seek maximum advantage in spousal and child support arrangements.  That strategy can backfire, however, if one of the parties is less than honest with the court.  It can even lead to the modification or termination of payments.  If you are contemplating dissolution of marriage or if you have already divorced and are still in conflict with your ex, the experienced matrimonial law attorneys at Nirenstein Garnice can help you find a just solution to your problems. Based in Scottsdale, Arizona, we have years of experience handling all types of divorce and domestic relations issues, including spousal support and child custody disputes.  Contact us today at (480)351-4804 for a confidential consultation.