For couples going through a separation or divorce, the marital residence and what happens to it can have big financial and emotional aspects to it. Historically, there were three choices for a marital residence: (1) the Wife retains it and pays Husband for a share of the equity; (2) the Husband retains it and pays Wife for a share of the equity; or (3) it is sold.
Under options (1) or (2), it was customary for the retaining spouse to either to refinance the mortgage(s) or have a deed of assumption whereby the retaining spouse assumed the mortgage(s). However, with the ever-changing requirements of the mortgage industry, more and more spouses are unable to meet the criteria in order to refinance or assume the mortgage. They do not have sufficient liquid funds to pay an additional down payment where the house may be underwater; they do not have the requisite income; they have too much other debt, etc.
The previous option for spouses who were unable to refinance or assume the mortgages was to place the house on the market for sale and then divide the net proceeds. Today, unfortunately, houses may have no equity, and/or the parties do not want to sell.
For settlement purposes, spouses can discuss allowing one party to stay in the house and can make an agreement on how mortgages are paid and can make an agreement on how the other spouse gets paid for his/her share of equity. If this is a course you are considering, it is important to consult with a family law attorney and a real estate attorney to make sure that the agreement is drafted in a manner to try to protect co-debtors of a note, to try to protect in the event of death, to try to protect against further judgments being secured by the house because once a divorce is entered, your rights in real estate can change.
There are many different opinions about if and when the real estate market will turn around and housing prices will increase. Making sure that you have set out a plan that takes into account a long term view is important and understanding the intentional and unintentional consequences of your actions are essential.
Tuesday, July 17, 2012
Thursday, July 12, 2012
Importance of Financial Planning
Most people enter into marriage with a strong sense of commitment, expecting that their marriage will last “until death us do part”. Sometimes, however, despite their best intentions, a couple ends up in a separation or divorce. Financial disagreement is a source of many separations and divorces. One protection for the parties in a marriage is for each party to understand and know about the finances, keep their spending and debts under control, maximize their income, and plan for savings and investments. Stay informed about what income is being brought into the household, what expenses are being incurred and what is being saved. Communicate and try to reach a mutual understanding of your goals for today and tomorrow.
Good financial planning is the key to your financial future; nowadays there are many resources on financial planning from basic budgeting to saving for college and retirement. Too often we see financial planning that is reactionary, triggered by divorce, a job change, children approaching college age, or the approach of retirement. Don’t wait to do your planning until one of these events occurs if you want to be ahead of the game.
People who work from a budget are more likely to manage their finances well than people who just spend what they feel they need to without regard to where the money will come from to pay their bills. In separation and divorce, we frequently are faced with couples who were living beyond what their combined incomes could sustain during the marriage; and then they are overwhelmed by the reality of how that same income now must be used for two households
In one of our upcoming blogs, we will give you some tips on how to budget. Being knowledgeable about finances is important whether you are single, married, divorced or widowed.
Good financial planning is the key to your financial future; nowadays there are many resources on financial planning from basic budgeting to saving for college and retirement. Too often we see financial planning that is reactionary, triggered by divorce, a job change, children approaching college age, or the approach of retirement. Don’t wait to do your planning until one of these events occurs if you want to be ahead of the game.
People who work from a budget are more likely to manage their finances well than people who just spend what they feel they need to without regard to where the money will come from to pay their bills. In separation and divorce, we frequently are faced with couples who were living beyond what their combined incomes could sustain during the marriage; and then they are overwhelmed by the reality of how that same income now must be used for two households
In one of our upcoming blogs, we will give you some tips on how to budget. Being knowledgeable about finances is important whether you are single, married, divorced or widowed.
Tuesday, July 10, 2012
Economic Layoffs
It is not news to our readers that the economy continues to be turbulent with unemployment rates still high, ongoing layoffs throughout the area, and a housing market that is slow to recover. Financial difficulties that couples must address in this environment are heightened and where separation or divorce is a component, the financial woes are further escalated. One cannot live as easily as two.
A spouse who has stayed home to care for children may find it difficult to obtain employment. A spouse who has historically worked may be laid off. How will bills for the marital residence be paid and how will bills for a separate residence be handled? Courts can make orders of child support, spousal support, payment toward the maintenance of assets. Spouses can try to work out an arrangement on their own. While each spouse may feel that they are entitled to live at the same standard of living, this is not necessarily possible if economic layoffs have hit your family and it will be important to look at what expenses can be cut.
Some financial planners now are becoming trained in helping couples, together or separate, to manage household expenses. Consulting with one of those professionals may be helpful. Considering options for debt consolidation may also be helpful.
Refinancing where economic layoffs have occurred may not be possible. Investigating options about how to pay the mortgage will be important.
In times of economic layoffs, understanding your own options for education, training, and possible changing careers paths should be gained.
Economic layoffs coupled with a separation or divorce can make times seem unmanageable; having a good support system in place will be important.
A spouse who has stayed home to care for children may find it difficult to obtain employment. A spouse who has historically worked may be laid off. How will bills for the marital residence be paid and how will bills for a separate residence be handled? Courts can make orders of child support, spousal support, payment toward the maintenance of assets. Spouses can try to work out an arrangement on their own. While each spouse may feel that they are entitled to live at the same standard of living, this is not necessarily possible if economic layoffs have hit your family and it will be important to look at what expenses can be cut.
Some financial planners now are becoming trained in helping couples, together or separate, to manage household expenses. Consulting with one of those professionals may be helpful. Considering options for debt consolidation may also be helpful.
Refinancing where economic layoffs have occurred may not be possible. Investigating options about how to pay the mortgage will be important.
In times of economic layoffs, understanding your own options for education, training, and possible changing careers paths should be gained.
Economic layoffs coupled with a separation or divorce can make times seem unmanageable; having a good support system in place will be important.
Tuesday, June 12, 2012
What happens to your power of attorney is someone files for custody or vistation or for separate maintenance?
Many married couples created powers of attorney (POAs) during their marriages which they would not want the other person to use in the event of separation or divorce. There is a new law that goes into effect in Virginia July 1, 2012 which provides that unless the power of attorney states otherwise, a power of attorney naming the spouse as the agent is automatically revoked by operation of law if either person in the couple files for custody or visitation or for separate maintenance.
The information you obtain at this site relates to Virginia law only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
| This article was written by Phoebe P. Hall. Managing Partner/Attorney, Hall & Hall, PLC, 1401 Huguenot Road, Suite 100, Midlothian, VA 23113, and 4323 Cox Road, Suite 100, Glen Allen, VA 23060, Tel: (804) 897-1515, Fax (804) 897-2499 |
Thursday, June 7, 2012
Walt Disney
We salute Walt Disney Company for its announcement on Tuesday that starting in 2015 (due to existing contracts) the company will be supporting the help to fight childhood obesity. Disney has imposed new standards on food advertising on the company-owned tv stations, radio stations, and websites. By doing this, children will be less exposed to junk-food ads while watching children programs. Along with this they have agreed to sponsor public service announcements promoting healthy eating choices and exercise to children. The company also will begin selling Disney food products, that meet its nutritional criteria, in grocery stores. The criteria includes lower calories, saturated fats, sodium and sugar. These products will display the Disney logo. The company has also stated that it will improve the food that is served at its theme parks. Many hope that with Disney doing this it will set an example for other large companies whose audiences are children.
This is just one of a number of steps that have been taken recently to promote healthier lifestyles in the United States. Over a year ago first lady, Michelle Obama began her campaign "Let’s Move" to help fight childhood obesity. The first lady supported this announcement by stating, "Disney is doing what no major media company has ever done before in the United States, and what I hope every company will do going forward. When it comes to the ads they show and the food they sell, they're asking themselves one simple question: 'Is this good for our kids?'"
Another step that recently was taken in May was that Mayor Bloomberg of New York City proposed a ban on sodas and sugary drinks larger than 16 ounces being sold in restaurants and at evenst in New York City.
As family law attorneys working with parents struggling to raise their children well, we are seeing an increasing concern about childhood obesity. It is exciting to see public officials and large corporations taking on this problem in a constructive way.
This is just one of a number of steps that have been taken recently to promote healthier lifestyles in the United States. Over a year ago first lady, Michelle Obama began her campaign "Let’s Move" to help fight childhood obesity. The first lady supported this announcement by stating, "Disney is doing what no major media company has ever done before in the United States, and what I hope every company will do going forward. When it comes to the ads they show and the food they sell, they're asking themselves one simple question: 'Is this good for our kids?'"
Another step that recently was taken in May was that Mayor Bloomberg of New York City proposed a ban on sodas and sugary drinks larger than 16 ounces being sold in restaurants and at evenst in New York City.
As family law attorneys working with parents struggling to raise their children well, we are seeing an increasing concern about childhood obesity. It is exciting to see public officials and large corporations taking on this problem in a constructive way.
This article was written by Phoebe P. Hall. Managing Partner/Attorney, Hall & Hall, PLC, 1401 Huguenot Road, Suite 100, Midlothian, VA 23113, and 4323 Cox Road, Suite 100, Glen Allen, VA 23060, Tel: (804) 897-1515, Fax (804) 897-2499 |
Wednesday, June 6, 2012
Division of a 401(k): A Risky Area
People who come to see us always have questions about their 401(ks)s. This often is the most significant asset to be divided in a divorce. It is a risky area because there are so many choices, and a lack of knowledge could adversely affect the size of a person’s share. It is critically important to get good advice and good craftsmanship. Couple are free to divide the account as they choose, or to allocate it all to one spouse. In most cases where the couple cannot reach an agreement, the court will divide the "martial portion" equally, but it is not required to do so. What looks like an equal division may not be as it seems depending on the wording used, so the agreement and order must be expertly drawn. The marital portion is the part earned during the marriage. The method for dividing defined contribution plans such as 401(k)s or 403(b)s is to utilize a Qualified Domestic Relations Order ("QDRO"). The QDRO will order the division according to the method and amount chosen by the parties or by the court. This can be a dollar amount or a percentage of the benefit. When a loan has been taken out against the 401(k) this must be taken into account in the order or agreement, and care should be taken not to allow further loans or withdrawals until the money is divided. The matter of survivor benefits is another important aspect of the division. The drafting of a QDRO is a highly complex job. There are numerous choices that go into how various terms are worded which can make a significant difference in each person’s share, and the requirements of the individual Plan Administrator must be taken into account. Merely utilizing the plan’s sample QDRO is not sufficient, as the document should be carefully crafted to meet the specific needs of the parties involved, with careful choices regarding optional terms to protect rights in this key asset division.
The information you obtain at this site relates to Virginia law only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
| This article was written by Phoebe P. Hall. Managing Partner/Attorney, Hall & Hall, PLC, 1401 Huguenot Road, Suite 100, Midlothian, VA 23113, and 4323 Cox Road, Suite 100, Glen Allen, VA 23060, Tel: (804) 897-1515, Fax (804) 897-2499 |
Tuesday, May 15, 2012
Hiding Money in Divorce
Clients going through divorce often worry that their spouse may be hiding assets. A recent article in the Wall Street Journal talks about why this has become much harder to accomplish successfully. As the article points out, " Thanks to technology, hidden marital assets may be just a few clicks away". Facebook is the top source of compromising evidence. Smart phones provide a great deal of information. Technology makes it possible to examine spouses' email and text messages, their web searching histories, their facebook pages, their photos, their twitter accounts, their online financial accounts. The technology posses challenges for both the hider and the finder of information. The law about what type of search is legal is still evolving. For example, it is legal to do a public Google search on a spouse, but it can be illegal to use a false name to search someone's private facebook account. Other issues relate to installing a GPS on someone's car or installing keystroke monitoring on their computer. Issues arise about whether the information was publicly on a family computer or in a family vehicle or a phone on a family plan or whether it was in an individual account password protected. There are state specific laws about how a person is permitted to obtain information and documentation and whether or not information can be use as evidence depending on how it was obtained. As family law attorneys, we often are called upon to advise clients as to what they are and are not permitted to do or permitted to use as evidence under Federal and Virginia law.
The information you obtain at this site relates to Virginia law only. It is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.
| This article was written by Phoebe P. Hall. Managing Partner/Attorney, Hall & Hall, PLC, 1401 Huguenot Road, Suite 100, Midlothian, VA 23113, and 4323 Cox Road, Suite 100, Glen Allen, VA 23060, Tel: (804) 897-1515, Fax (804) 897-2499 |
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