Most people understand that marital property is divided in a Wisconsin divorce. However, the other side of that coin includes the division of marital debt. The division of debt can be as important, and in some cases more important, than dividing marital property.
All debt that is accumulated over the course of a marriage, for homes and cars, is categorized as community debt. After divorce, both parties are equally responsible to pay back this debt. For example, if you and your former spouse purchased a car for $30,000 and paid off half of it, you will both share equal responsibility in paying back the remaining $15,000.
The situation can be more complicated, however. If your spouse purchased that vehicle without your knowledge, even when using a credit card that was in his or her name only, you will still owe the same share of the money if you live in Wisconsin or other community property states.
Other forms of debt include living expenses. Living expenses typically include the money you pay for utility bills, groceries, gasoline, cell phone and cable bills, and rent or mortgage payments. Items like appliances, including refrigerators, TVs and gym equipment, are considered to be community property.
However, it becomes very difficult to properly assign debt when one spouse had existing debt before the marriage and both parties add to that debt during the marriage. This type of situation often requires a detailed accounting and investigation of expenses.
If you have questions about marital debt or property division in Wisconsin, an experienced family law attorney can help you understand your rights and obligations under the law.
Source: Wallet Pop, “Divorce and Debt: What You Owe and What You Don’t,” Geoff Williams, 2/25/2011
Prenuptial Agreements Rising in Popularity
In a recent study by the American Academy of Matrimonial Lawyers (AAML), 73 percent of attorneys reported an increase in prenuptial agreements over the past 5 years. Of those surveyed, 52 percent also reported an increase in women requesting the agreements.
Prenuptial agreements, sometimes referred to as antenuptial agreements or as “prenups”, are pre-marriage contracts that specify how property would be divided in the event that the couple divorce. Some may think that these agreements are only for the rich and famous. However, the major increase in prenuptial agreements is coming from everyday people.
One major source of the increase in prenuptial agreements comes from couples entering a second marriage. Many people who have been through a contested divorce want to limit the possibilities of going through a second contested divorce. Having a prenuptial agreement is a good way to avoid extensive property fights in another contested divorce.
However, prenups are not just people entering a second marriage. Over the past 30 years, we have seen a trend towards people marrying later in life. Since 1980, the average age for a man getting married for the first time has gone up two years and is now at 26.8 years of age. For women, the average age has gone up nearly 3 years, and is now at 25.1 years of age.
Many people are no longer getting married right after school and are working for a few years before marriage. This gives people more opportunity to work and therefore people are bringing more assets to a marriage. We are seeing that prenuptial agreements are not just for the very wealthy; rather prenups are for any person who wants to protect the assets he or she brings to a marriage in the event of a divorce.
Source: Minneapolis Star Tribune: More couples saying ‘I do’ to prenups; Jeff Strickler, 10/27/2010
Dodgers Divorce Closer to Resolution: Part I
The Dodgers are one of the most storied franchises in Major League Baseball, and one of baseball’s most valuable teams. The team has been in some turmoil, mainly for off the field reasons. Most importantly, who will own the team for next season depends on the ruling in a divorce case.
Frank McCourt bought the team for approximately $355 million in 2004. This year, Forbes Magazine estimated the team’s value at $727 million including Dodger stadium and other team-owned facilities. Frank McCourt and his wife, Jamie, have been married since 1979 and were both active in owning and managing the team. However, in 2009 Frank McCourt fired Jamie McCourt as chief executive of the team. Shortly thereafter, Jamie filed for divorce from Frank.
Frank is claiming full ownership of the Dodgers based on a post-nuptial agreement they signed after purchasing the team, but before moving from Massachusetts to California. The post-nuptial agreement would give Frank complete ownership of the Dodgers, and Jamie would receive sole ownership of the McCourts’ vast real estate holdings.
Like Wisconsin, California is a community property state. In a community property system, the property of both spouses is considered to be marital property and each spouse has half-interest in all marital property. When a couple divorces, the marital property must be divided between them. Jamie McCourt is arguing that the post-nuptial agreement is invalid under community property law, and therefore she is entitled to a 50 percent share in the Dodgers.
They presently have a divorce case pending in Los Angeles County Superior Court. That case would rule on the validity of the post-nuptial agreement and determine who gets what in the McCourt divorce. While that case is pending, the McCourts are also participating in mediation, a form of dispute resolution that bypasses the courts and gives the parties an opportunity to reach a negotiated compromise. In our next post, we will go into more detail on the McCourts’ mediation and the case that is presently pending in court.
Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010
Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)
Dodgers Divorce Closer to Resolution: Part II
In our last post, we discussed the Frank and Jamie McCourt divorce. Unless they can reach a settlement, the judge in the McCourt’s divorce case will determine the ownership of the Los Angeles Dodgers. Ownership of the Dodgers will depend on the validity of the McCourts’ post-nuptial agreement and an interpretation of California’s system of community property law- a system similar to Wisconsin law.
While their divorce case is pending, the McCourts have also participated in mediation in an attempt to reach a compromise. Last week, the judge overseeing the mediation met with each of the McCourts separately and advised them of how he believes they should divide ownership of the Dodgers.
While the mediator ordered that the parties not publicly discuss the mediation, reports indicate they have until the end of the month to accept or reject the mediator’s recommendation. Reports also indicate that the mediator’s opinion would give Jamie an interest in the Dodgers. Although the details of the mediator’s opinion are presently confidential, past settlement and mediation discussions do shed some light on what is being discussed.
The McCourts have attempted to reach a settlement many times, both with and without a mediator. In the past, discussions between the McCourts have established that Jamie would give up her interest in the Dodgers and Frank would compensate her. However, the parties have been unable to come to terms on how much should be paid. If the McCourts cannot settle this issue, it will be up to Los Angeles Superior Court Judge Scott Gordon to make a ruling on the post-nuptial agreement and the ownership of the Dodgers. Judge Gordon has until December 29 to rule in the case.
Almost any divorce has the potential to have very complex issues that can be difficult to resolve. The McCourt divorce demonstrates that when there are significant assets in dispute, property division issues can be difficult to settle by compromise alone. The McCourts have made several attempts at reaching a negotiated compromise, but if they cannot reach a compromise then this case will be in the hands of a judge.
Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010
Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)
Jamie McCourt wins Ruling in Dodgers Divorce
Previously, we posted about the divorce between Frank and Jamie McCourt that will determine who owns the Los Angeles Dodgers. Frank and Jamie participated in mediation in an attempt to reach a property division settlement, however their mediation failed. Without a settlement in place, it was up to Judge Scott Gordon to rule on the issue of who owns the Dodgers and whether a post-nuptial agreement between the McCourts was binding.
If valid, the agreement would give Frank McCourt sole ownership of the Dodgers. Tuesday, Judge Gordon threw out the post-nuptial property division agreement, a decision that could make Jamie McCourt part owner of the team and could result in protracted property division litigation.
Judge Gordon found the post-nuptial agreement invalid based on errors occurring when the McCourts signed the agreement. During the trial, the attorneys for both sides reviewed the documents and found that the McCourts signed six copies of the agreement. Three of the copies listed the Dodgers as Frank’s sole property, but three copies did not.
Frank McCourt could decide to appeal Judge Gordon’s ruling, but he is already employing another legal strategy. Frank has informed the court that he is claiming sole ownership of the Dodgers on the theory he bought the franchise using the assets of a company he established before he married Jamie.
The parties disagree on how long it would take to resolve this new claim. Frank’s attorneys believe this new property division claim could be resolved in a one-day trial based upon evidence that has already been introduced into the record. Jamie’s attorneys believe the trial could require up to 60 days and months to collect new evidence.
As an alternative to further court proceedings, this ruling may bring the McCourts back to the negotiation table to settle their property division contest. Past negotiations focused on Jamie giving up her interest in the Dodgers and Frank compensating her, but they could never come to terms on a deal. During the past negotiations, the post-nuptial agreement was an unknown variable. Now that there has been a ruling on the issue, the McCourts may now feel they have a better understanding of their rights and be able to reach a compromise.
Source: Los Angeles Times, “Dodgers’ ownership in limbo after judge throws out McCourt property agreement,” Bill Shaikin and Carla Hall, 12/7/2010
Millions More Demanded in Kelsey Grammer Divorce
Kelsey Grammer, the actor best known for his portrayal of Dr. Frasier Crane, has had a tremendously successful career in television. He played the role of Frasier Crane for 20 years, 11 of which were on the NBC sitcom “Frasier.” At the peak of his earning power on “Frasier,” Grammer earned $700,000 per episode. “Frasier” ran from 1993 to 2004 and Grammer married his third wife, Camille Donatacci in 1997.
Many people credit Donatacci with helping Grammer turn his acting earnings into an even larger fortune through strategic investments in real estate and establishing Grammnet, a television production company, which has produced several television shows including NBC’s “Medium.” It is estimated that Grammer’s net worth has expanded to between $100 and $120 million.
Grammer and Donatacci married in 1997 and have two children together. However, due to reports of an extra-marital affair, Donatacci filed for divorce from Grammer in July 2010. The couple did not sign a prenuptial agreement, which may prove very costly for Grammer.
Grammer is interested in settling this divorce quickly because he wishes to remarry as soon as he can. However, the issue of marital property division is proving to be an obstacle to settlement. Grammer had offered a settlement of $30 million.
Just before Christmas, Ms. Donatacci rejected that settlement offer because she believes community property law entitles her to $50 million of the estimated $100 million he earned during their 13-year marriage and that she is entitled to her fair share as a cofounder of Grammnet Productions. Additionally, Donatacci is requesting child support and spousal maintenance, which Grammer’s offer reportedly did not include.
Sources:
Huffington Post, “Camille Grammer Demands $50 Million In Divorce Settlement: Report,” 12/30/2010
The Telegraph, “Kelsey Grammer facing large divorce pay out,” Nick Allen, 12/29/2010
Survey Indicates Financial Dishonesty Common Among Married People
There are many reasons why a marriage might fall apart, but many causes of divorce share the common theme of dishonesty. Trust in a marriage is important, and dishonesty can deeply damage the trust shared between spouses. A new survey by Forbes.com and the National Endowment for Financial Education has found that dishonesty about finances is becoming increasingly common among married people, with more than 30 percent of respondents indicating some form of “financial infidelity.”
The survey question 2,019 adult respondents and found that 31 percent of American couples who have combined finances were not always truthful about financial issues. The most common financial lie involved hiding cash or assets, followed by hiding a minor purchase, hiding a bill, hiding a major purchase, hiding a bank account and distorting debt or earnings.
When it occurred, the effects of financial dishonesty were very pronounced. Of those respondents who indicated they had experienced financial dishonesty in their marriage, 16 percent said the dishonesty led to a divorce, 11 percent said it caused a separation, 67 percent said it led to an argument and 42 percent believed it lead to a loss of trust in a relationship.
When divorce does result from financial dishonesty, marital property division will often be an important contested aspect of the divorce. In order to have a fair division of marital assets, it is important to have a clear picture of a family’s financial situation. Having a clear understanding of the marital debts and assets can be complicated when a spouse is hiding assets. Experienced divorce attorneys understand the importance of a thorough investigation into marital assets and will often collaborate with financial professionals, including forensic accountants, when it appears one spouse may be concealing marital property.
Source: Reuters, “Three in 10 Americans commit financial infidelity?,” Daniel Trotta, 1/13/2011
Kelsey and Camille Grammer settle divorce dispute
In January, we wrote that Kelsey Grammer was having difficulties finalizing his divorce. According to celebrity news outlet TMZ, Kelsey Grammer’s divorce from his wife Camille Grammer is currently being finalized. The news comes only days after reports that the two had struck a preliminary deal ending their marriage.
Although the precise details of the deal have yet to be revealed, it is widely believed that Kelsey and Camille’s disagreements regarding the divorce were mainly related to property division. Camille reportedly demanded $50 million, and Kelsey originally offered $30 million. The pair had not signed a prenuptial agreement when they were first married.
Kelsey and Camille Grammer’s divorce has been heavily publicized for months, primarily through interviews, released court documents and Camille’s appearances on the reality TV show “The Real Housewives of Beverly Hills.” During these appearances, Camille revealed that the pair had had difficulties with intimacy and that she begged Kelsey not to leave.
As for the divorcing couple’s future plans, Camille has announced that she never plans to remarry. Kelsey, however, will only be single for two weeks. He plans to marry Kayte Walsh, a former flight attendant, on February 25 in New York City in a lavish wedding celebration. Camille was invited to the wedding but she has declined to attend. Kayte and Camille met previously in a situation that Camille described as “uncomfortable.”
Kelsey Grammer is best known for his starring role as Frasier Crane in the hit show “Frasier,” as well as his appearances as the same character in a supporting role on “Cheers.”
Source: Huffington Post, “Kelsey, Camille Grammer Divorced,” 2/10/2011
Understanding debt and divorce in Wisconsin
Most people understand that marital property is divided in a Wisconsin divorce. However, the other side of that coin includes the division of marital debt. The division of debt can be as important, and in some cases more important, than dividing marital property.
All debt that is accumulated over the course of a marriage, for homes and cars, is categorized as community debt. After divorce, both parties are equally responsible to pay back this debt. For example, if you and your former spouse purchased a car for $30,000 and paid off half of it, you will both share equal responsibility in paying back the remaining $15,000.
The situation can be more complicated, however. If your spouse purchased that vehicle without your knowledge, even when using a credit card that was in his or her name only, you will still owe the same share of the money if you live in Wisconsin or other community property states.
Other forms of debt include living expenses. Living expenses typically include the money you pay for utility bills, groceries, gasoline, cell phone and cable bills, and rent or mortgage payments. Items like appliances, including refrigerators, TVs and gym equipment, are considered to be community property.
However, it becomes very difficult to properly assign debt when one spouse had existing debt before the marriage and both parties add to that debt during the marriage. This type of situation often requires a detailed accounting and investigation of expenses.
If you have questions about marital debt or property division in Wisconsin, an experienced family law attorney can help you understand your rights and obligations under the law.
Source: Wallet Pop, “Divorce and Debt: What You Owe and What You Don’t,” Geoff Williams, 2/25/2011
Divorce and Social Security
Social Security is the main source of income for over 70 percent of retirees, many of whom are unmarried as a result of a divorce. Unfortunately, financial advisors rarely focus on how divorce can negatively affect their clients’ retirement plans.
Communications director for the Social Security Administration, Leslie Walker, encourages divorced individuals to research the rules regarding spousal and survivor benefits. Walker says that many divorced people make errors that can decrease their Social Security benefits.
Generally, you are eligible to receive spousal benefits if you were married to someone for at least 10 years who paid into Social Security. Eligibility is not affected even if you are currently divorced from this individual. If you claim these benefits at your full retirement age, you are generally given 50 percent of your former spouse’s Social Security benefits. If you worked for at least 10 years and also paid into Social Security during that time, you may be able to receive your own benefits.
However, you cannot claim spousal benefits as well as your personal work record benefits, but you are allowed to choose the benefit option that grants you with the largest amount of money. It is important to note that, if you remarry before you turn 60 years old, you are not eligible to claim benefits from a former spouse.
You are entitled to survivor benefits that equal 100 percent of your former spouse’s benefits if he or she died prior to claiming Social Security. If you remarried and divorced after the death of a spouse, you are also eligible for spousal benefits from your second marriage. However, you cannot claim both benefit options, but you can choose the option that provides you with the most money.
Source: Los Angeles Times, “Divorce can complicate Social Security claims,” Kathy M. Kristof, 3/6/2011
Considerations for divorce over the age of 50
Divorce is never an easy thing. There are many issues that must be sorted out, both emotional and financial. Those issues are compounded even further if the parties are divorcing later on in life. Individuals who divorce over the age of 50 can face very complicated issues in their divorces, especially when it comes to the division of marital property in Wisconsin.
A couple divorcing after 50, in all likelihood, has had a long history together and sorting through decades’ worth of mutually owned property can be a daunting task. However, considering some issues common to divorce later in life can help make the process simpler.
The value of retirement funds can be deceptive. Many people might assume that $250,000 in a 401(k) is roughly equivalent to a marital home worth $250,000. That assumption is wrong because the money in the 401(k) is going to be reduced by income taxes when it is withdrawn. It is imperative that both parties fully understand the true value of those retirement funds in order to have an equitable division of assets. If that’s not the case, then there is a chance that one of the parties may get short-changed.
The next mistake that people make during a divorce is putting too much stock in alimony payments and not enough stock in Social Security. Alimony is great while the former spouse is alive and working, however individuals who divorce later on in life are at greater risk of passing away shortly after a divorce, thus depriving the other party of alimony. Some divorcing spouses focus on establishing a life insurance policy with a former spouse and negotiating for their Social Security benefits. That way, when they leave workforce or pass away, they will still have assets that can be assigned.
Finally, many people do not consider their adult children when they divorce. Parties should consider how their divided assets pass down to their adult children. There have been instances of children being accidentally disinherited because divorcing parents did not consider their adult children in the divorce settlement. A solid divorce agreement can ensure that not only mutually owned property will be properly divided, but also that it will be properly inherited.
Divorce and marital property division can be complex issues and the way to best structure a divorce varies on an individual’s circumstances. If you have questions about divorce, an experienced family law attorney can help.
Source: SmartMoney.com, “Divorce Over 50: 3 Mistakes to Avoid,” Catey Hill, 3/23/2011