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How to value the marital residence in divorce

For many couples in Wisconsin, the home is the largest asset in the marital estate. If a couple divorces and one spouse wants to keep the home after the divorce, an accurate valuation of the property becomes a crucial component of property division. If the home is valued too high, spouses keeping the homes will owe more equity to the other spouse than what would be paid if the home is valued accurately. If the homes are valued too low, the spouses who are vacating the home will not get all the equity to which they are entitled.

There are three ways to value a home in the event of divorce. The first and most reliable method is to hire a licensed appraiser. This is the most expensive method. The cost of an appraisal may go up to several hundred dollars depending on the market. However, the value of an accurate appraisal easily justifies the additional cost.

The second method to value the home is through a comparative market analysis. It involves comparing the home to homes that have been sold in the same area. A comparative market analysis can be done by a realtor for little or no cost. However, it is less accurate than an appraisal because it does not take the home’s specific condition into account.

The third method is for the parties to do their own research by using websites designed for the purpose of valuing homes. This is the least accurate and most unreliable method. If both parties are not in agreement, the valuation may be given little weight by the court. Experienced family law attorneys in Wisconsin may advise as to the specific options available for valuation of the home in your case to ensure an equitable property division.

Source: Huffington Post, “Three Ways To Value Your Home In A Divorce,” Joseph E. Cordell, March 1, 2013

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Filing taxes following divorce

Like many Wisconsin residents, you may view tax preparation as an unpleasant chore. But if you recently have divorced or are now going through divorce, you may find yourself facing new challenges this tax season. Things you previously took for granted, like your filing status and dependent deductions, may prove fertile grounds for confusion. Here are a few things you need to know when preparing your taxes after a divorce.

One area of confusion may be the appropriate tax filing status to use. The relevant date is December 31. If you were still married on that date, you must file either as married filing jointly or married filing single. If your divorce was final by December 31, you may file as head of household, provided you meet some specific requirements relating to your living arrangements during the tax year, or as single. There may be tax advantages to filing as head of household, so ask your attorney or tax advisor if you meet the requirements.

Another source of confusion is dependent deductions. Unless the former spouses reach an agreement to the contrary and execute an IRS Form 8332, the deduction belongs to the parent with whom the children resided for more than half the year. Note that if you pay child support, the payments you make are not deductible.

While you may be taxed on alimony payments that you receive, any property that is transferred to you pursuant to the terms of a divorce is not taxable, either as income or as a gift. The property retains its original tax basis, which you will use to calculate any taxes owed when you later sell or dispose of it. Given the potential tax implications of divorce, your best bet may be to consult with a qualified attorney or tax advisor before you file.

Source: Huffington Post, “Preparing Your Taxes In The Year Of Divorce,” Kathleen B. Connell, March 21, 2013

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Reasons why a prenuptial agreement may not be enforced

Divorce attorneys in Wisconsin and around the nation are taking note of a recent court case in which the judge threw out a prenuptial agreement that a woman had signed prior to marrying her multimillionaire husband. Previously regarded as difficult to void, prenuptial agreements have become increasingly common, especially for people with high net worth or those entering second marriages. How enforceable are they in light of the recent court case?

A prenuptial agreement is a legal document signed prior to marriage documenting the future spouses’ understanding regarding which of their assets will become marital property and how property division will be handled in the event of divorce. There are several circumstances under which a court may refuse to enforce a prenuptial agreement. If one party undervalued or failed to disclose assets at the time the prenuptial agreement was signed, the court may refuse to enforce it on the grounds of fraud. Accordingly, full disclosure of all assets and liabilities is important to the future enforceability of the agreement.

A prenuptial agreement also is subject to revocation if it was coerced or executed under duress. The agreement should be negotiated and finalized well in advance of the wedding, not presented for the first time shortly before the bride is to walk down the aisle. It should be signed by both parties in the presence of a notary public or other witnesses who can confirm that it was executed voluntarily and without coercion.

Poorly drafted agreements and those containing a number of errors also are susceptible to being thrown out. Agreements that contain unconscionable provisions, such as a stipulation that no child support will be owed under any circumstance, also are subject to challenge. The best way to ensure the effectiveness of a prenuptial agreement is for both parties to have their own legal representation in the negotiation and drafting of the agreement.

Source: Forbes, “Five Reasons Your Prenup Might Be Invalid,” Jeff Landers, April 2, 2013

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Divorcing spouse may be liable for ex

A common question for Wisconsin residents who are divorcing is whether they can be held financially responsible for a former spouse’s credit card debt. The answer may surprise some. Because Wisconsin is a community property state, a credit card company can pursue the cardholder’s spouse for credit card debt even if the spouse is not a joint account holder. The spouse is presumed to be jointly liable for the debt unless he or she can prove otherwise.

In a divorce decree, the court divides the former couple’s assets and debts between the two parties. If one spouse was incurring credit card debt without the other spouse’s knowledge and without the other spouse benefiting in any way from the expenditures, the court should be so advised. The judge likely will take these circumstances into consideration when allocating debt between the parties, particularly if the expenditures contributed to the end of the marriage.

Even though the court may allocate the credit card debt to one spouse as part of the property division, this may not get the other spouse off the hook for the debt as far as the credit card company is concerned. The court does not have jurisdiction over agreements the parties may have with third parties, meaning a creditor may try to collect from one spouse if the other does not pay, regardless of what the divorce decree says. Accordingly, it is important to make sure the credit card debt is paid off as a condition of the divorce settlement.

In the event that one spouse has incurred significant debt, the other spouse should take certain steps before divorce. First, document the status of all accounts held by the couple, including credit cards, mortgages, bank accounts and the like. Second, obtain a credit report to ensure there are no other unknown accounts. Close as many joint accounts as possible, making sure to comply with any conditions imposed by the divorce court first. Finally, a spouse may also want to consult with an experienced divorce attorney.

Source: Fox Business, “Is Wife Liable for Ex’s Card Debt?“, Sally Herigstad, May 07, 2013

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More common for wives to pay alimony

Wisconsin residents might be interested to hear that it is becoming more common for wives to be ordered to pay alimony to their ex-husbands in divorces. Husbands and wives do not necessarily have the stereotypical marriage arrangements that they used to have in the past. Traditionally, wives stayed at home while the men were the primary breadwinners. Now, however, wives may be the primary breadwinners, or both spouses may earn income equally.

Alimony was originally designed to allow the spouse who stayed at home to care for the home and children to continue living in the lifestyle he or she had become accustomed to. Traditionally, the woman was the one who received alimony from her husband during a divorce. With studies reporting that over 40 percent of the wives who work earn more than their husbands, that trend is beginning to shift. This makes it so that some husbands are, in fact, receiving alimony from their wives rather than the other way around.

Experts say that many women, like men, do not like having to pay alimony to their ex-husbands. This is especially so in cases where both the husband and the wife worked, but the wife simply earned more than the husband. Some people are advocating for the removal of alimony altogether in an attempt to make divorces as de-genderized as marriages are becoming.

Family law lawyers may be able to help people who are going through the divorce process ensure that they receive a divorce settlement that is in their best interest, and they may be able to help a couple negotiate issues such as alimony, property division, child custody, child support and other divorce matters throughout divorce proceedings.

Source: TIME Ideas, “The De-Gendering of Divorce: Wives Pay Ex-Husbands Alimony Too Read more: http://ideas.time.com/2013/05/16/the-de-gendering-of-divorce-wives-pay-ex-husbands-alimony-too/#ixzz2TrG4sEau“, Liza Mundy, May 16, 2013

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Dividing assets in divorce

A Wisconsin resident contemplating divorce may have many questions about the division of marital assets. Wisconsin is a community property state, meaning both spouses are considered to own all marital property equally. When marital property is divided upon divorce, a 50-50 split is the standard, regardless of each spouse’s individual financial situation. So what does marital property include?

Essentially, marital property consists of all assets and income acquired by one or both spouses during the marriage. It includes things like bank accounts, investments, retirement plans, business assets, stock options, real estate, and vehicles, regardless of whether title to the property is in the name of one or both spouses. Property owned by either spouse before marriage generally is not considered marital property unless it was commingled with marital assets. For example, if one spouse owned a home prior to the marriage and put the other spouse on the title after marriage, the home would be considered marital property and subject to division in divorce.

Certain assets acquired by one spouse during the marriage also may be considered that spouse’s separate property, provided the separate property was not commingled with marital assets. These include a gift received by one spouse from a third party, money or property inherited by the spouse, and damages awarded to the spouse for pain and suffering in a personal injury action. In some cases, any increase in the value of separate property during the marriage may be deemed part of the marital estate subject to division, particularly if the increase was due to improvements made using marital assets.

Finally, the marital estate also includes debts incurred by either spouse during the marriage. Just as each spouse receives an equal share of the marital assets upon divorce, the couple’s debts also are divided between the parties. Rather than let the court decide who gets what in a divorce, many couples opt to pursue an out-of-court settlement with respect to the division of marital assets and debts.

Source: Huffingtonpost Divorce, “Understanding how assets get divided in divorce“, Jeff Landers, June 14, 2013

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In divorce, being right does not always mean being happy

Wisconsin divorces often become more complicated when couples lose focus of what might be best for both parties and their children. Some couples concentrate on the wrongs they feel they’ve suffered. The emotions related to these perceived wrongs can be so intense that they only serve to add drama to the divorce negotiations.

Sometimes, the emotions related to a divorce can overpower the couple’s sense of clarity. It is during moments like these when perhaps the best person to ask about the situation is a disconnected third-party who can look at the situation and clearly see what would be best for those involved.

Making decisions based on emotions can sometimes be very volatile during a divorce process, leading to negative outcomes for those involved. Sometimes, it is better to negotiate without going to court. A legal battle over maintenance, child support or the separation of family assets can become costly, both in time and money. Additionally, it can also cause stress and even more more emotional pain. Asking a lawyer for advice on achieving fair negotiations and avoiding lengthy legal battles can be the best way to find a solution that is beneficial for all parties involved.

Because emotions can be so overwhelming during a divorce, couples have the option of filing for a Temporary Hearing to address issues such as payment of bills, maintenance and child support, child custody and even the use of the family’s residence and automobile at the beginning of the process. There are many laws regulating the divorce process, and a lawyer can be a valuable asset to navigate them.

Source: WiCourts, “Basic Guide to Divorce/Legal Separation”

Source: Huffington Post, “Do You Want To Be Right Or Do You Want To Be Happy?“, Debbi Dickinson, June 18, 2013

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What happens to frequent flyer miles in a divorce?

Negotiating a divorce settlement in Wisconsin can be an all-consuming process as the parties value and divide the assets of their marital lives. While couples expect to negotiate the division of real estate assets, bank and retirement accounts, and stock portfolios, they also need to be prepared to negotiate the division of more unique marital assets as well, including automobiles, jewelry, art and frequent flyer miles.

While squabbling over an item as mundane as frequent flyer miles might seem cliched, it does happen with surprising regularity during the negotiation of divorce settlements. The miles and reward points accumulated as a result of airplane, hotel and credit card rewards programs can be hard to value. Further complicating the matter is the fact that many rewards programs do not permit its participants to transfer or divide the accumulated rewards points and frequent flyer miles.

The program’s terms and conditions will determine how frequent flyer miles and rewards program points are to be valued and divided. Programs that assign a dollar value equivalent to their points make negotiating a settlement easier. If no dollar value equivalent is assigned to the rewards program points, a value can be assigned based on the value of the item the points can purchase.

Establishing a complete and fair divorce settlement requires a comprehensive analysis and valuation of all marital assets. Maintaining a detached, business-like approach to the division of assets is an important part of the process because making decisions based on emotional attachments to property can mean that a spouse may walk away from higher-valued assets in favor of a sentimental item cherished by the other spouse. A divorce attorney may be able to help make practical decisions regarding the division of marital assets and may be able to help a divorcing spouse receive a fair divorce settlement.

Source: Forbes, “Divorce: Who Gets The Air Miles?“, Jeff Landers, June 26, 2013

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What is the future of alimony?

Wisconsin residents who divorce may no longer have to pay or receive alimony in the future, and if they do, it may be under completely different circumstances. In the last few years, the idea of eliminating or changing the way alimony works has gained ground. While the goal of alimony is to ensure that a husband or wife who sacrificed their career to take care of their family are still taken care of in the event of a divorce, many say the process is unfair and sometimes even abused.

In some cases, court ordered alimony can require an individual to pay for the rest of their life if their ex-spouse does not remarry. Additionally, extenuating circumstances, such as infidelity or substance abuse problems, are not always taken into consideration when people are being ordered to pay alimony. This is why many advocates are urging reforms that could limit the duration of alimony and add flexibility to the decision making process.

Still, not everyone is in favor of these changes. Opponents believe that changing the way alimony works could harm women because they are often the ones who end up staying at home and taking care of children instead of pursuing a career. Those who are against changes are also concerned about formulaic mandates that would keep judges from being able to make appropriate changes to court ordered alimony during a divorce.

Individuals who are going through a divorce will want to ensure that asset division and alimony payments are decided equitably. A lawyer could help someone understand state laws and their potential impact.

Source: MainStreet.com, “Is This the End of Alimony?”, Cheryl Lock, July 01, 2013

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In WI, bankruptcy before divorce affects property division

Determining what course to take first when a couple decides to divorce in the Milwaukee area is often difficult under the best of circumstances. A divorce scenario becomes even more muddied when financial problems such as foreclosure and bankruptcy loom on the horizon. In most cases when at least one spouse intends to file for bankruptcy in addition to filing for divorce, attorneys will recommend that the bankruptcy filing occur before divorce proceedings are initiated. This becomes even more important when the divorcing couple’s home is expected to go into foreclosure. Filing for bankruptcy before divorce proceedings begin will eliminate clients from a myriad of financial obligations and streamline the divorce process.

In a scenario where a foreclosure looms, if bankruptcy is filed first, the spouse requesting debt relief will not be responsible for any missed mortgage payments following the filing. Wisconsin has an anti-deficiency statute, meaning that the former homeowners will not be responsible for the difference on the amount owed on a foreclosed home and the amount the property is sold for at auction. The law is complicated, however, and should be explained by a competent attorney.

Another scenario that affects the finances of a divorcing couple is the short sale of a home, where the property is sold for less than its worth. Short sales protect the credit of both ex-spouses but require the cooperation of both in order for the sale to occur.

Filing for bankruptcy before divorce is essential because it will also release the spouse petitioning for debt relief from responsibility on credit cards and other unsecured debt. Once the financial picture has settled, a competent family law firm may be able to guide clients through other divorce issues such as division of property and assets that otherwise would be in limbo because of muddied financial conditions.

Source: Fox Business, “Which Should I File First: Divorce or Bankruptcy?“, Justin Harelik, July 10, 2013

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