Month: September 2017

Divorce and Mortgage Tips

Posted by Ron Kauffman on

When there is equity in the home, everyone wants their share of the money as part of the final divorce. But, when one person wants to remain in the home, the party who decides to stay in the home will likely have to qualify for a mortgage on his or her own.

Staying in the Home

There are a lot of issues involved in the marital home, and when applying for that post-divorce mortgage. I’ve written before about property divisions when the housing market was down. Now that the housing market is in recovery, different issues arise.

Spouses who choose to stay in the home may have to refinance the mortgage to cash out enough equity to pay off their soon-to-be Ex. Even a spouse who has the financial resources for a buyout will still have to get a mortgage in his or her name.

The spouse walking away from the house, not only wants their share of the equity in the property, but need to get their name off the existing mortgage for a couple of reasons.

First, their name must be removed so their credit score won’t reflect the debt, that way they won’t be liable for any non-payment.

Once your name is on the mortgage, you are jointly and severally liable for the entire debt amount. The mortgage can tie up your credit, making it difficult to qualify for another mortgage, or even a car loan.

Worse still, if there’s a default or late payment of the mortgage – you are not only going to be sued – your credit report score could drop considerably, even though you are not at fault.

Investopedia offers a few tips to give yourself the best chance at getting a new mortgage after your divorce.

Pay the current mortgage

Even if you moved out of a jointly owned home during your separation, if your name is on the mortgage, you are still responsible for the payments. You may want to ensure that your spouse is keeping track of the bills to avoid damaging your own credit.

If your spouse refuses to make payments on the mortgage, and you rack up late notices or even a foreclosure, your own credit score can be badly hurt.

The result of a poor credit score could be a much higher interest rate on your new mortgage, which will cost you thousands over the lifespan of the loan, or rejection.

Remove your name from the mortgage

Your settlement and divorce decree may declare that you’re no longer responsible for the mortgage on the former marital home, but not in the eyes of the mortgage company! Before you can qualify for that post-divorce mortgage, you may have to refinance.

Unfortunately, getting your name off of the existing mortgage isn’t easy. In order to officially have your name removed from the mortgage, the spouse keeping the home will either have to refinance the home and qualify for an entirely new mortgage, or sell the home.

Until either of two choices are made, the mortgage payments are still directly linked back to your own credit — no matter what your divorce decree states.

In these situations, it is not unusual to add a clause to your agreement giving a party a period of time to either refinance the house or sell the house.

Don’t buy a new home yet

As with all major life changes, your divorce will significantly affect your financial status. Hold off on your decision to apply for that post-divorce mortgage and buy that new home until you’ve had time to adjust to a newly single income, child support payments, and alimony payments.

Purchasing a new home immediately after your divorce is final can be tempting, but don’t forget to take care of these three items first.

By making financially wise decisions with your current mortgage, you’re setting yourself up for success—when the time comes to get a new mortgage and move into your new home.

The Investopedia article is available here.

 

Sharia Divorce in Germany

Posted by Ron Kauffman on

The European Court of Justice is considering whether a foreign divorce, granted by a Sharia court, is valid in Germany. The German case raises the issue of when foreign laws conflict with rights protected in other countries, an issue Florida has grappled with.

Sharia Divorce in Europe

On Thursday this week, the advocate general at the European Court of Justice (ECJ), issued an opinion saying that a foreign divorce under Sharia law should not be recognized.

The ECJ judgment is still pending; however, judges often follow such recommendations.

The case involves a couple from Syria with German nationality. They married in 1999 in Homs, Syria, before moving to Germany. Four years ago, in a Syrian Sharia court, the husband ended the marriage by repeating the word “talaq” (“I divorce you”) three times.

Florida Divorces and Sharia

I have written extensively on foreign divorce before, and the triple Talaq issue specifically. As the European case suggests, the Triple Talaq allows Muslim men to leave their wives instantaneously by saying “talaq,” meaning divorce, three times.

The thousand-year-old custom of triple talaq was recently banned by the Indian Supreme Court.

Florida has resolved the issue of the enforcement of foreign divorce in Florida to a certain extent when it enacted Florida Statute 61.0401. The statute prohibits courts in Florida from enforcing:

  • A choice of law provision in a contract selecting the law of a foreign country which contravenes the strong public policy of this state or that is unjust or unreasonable.
  • A forum selection clause in a contract that selects a forum in a foreign country if the clause is shown to be unreasonable or unjust or if strong public policy would prohibit the enforceability of the clause.
  • A judgment or order of a court of a foreign country is not entitled to comity if the foreign court offends the public policy of this state.

Florida Statutes do not mention Sharia, or any religious divorce law at all. However, in an international divorce case in Florida, to the extent the Syrian divorce (triple talaq) law violates the U.S. and Florida Constitution, the Syrian law may not be enforceable.

The European Divorce Debate

The European Union Divorce Law Pact, known in family law circles as “Rome III Regulation”, governs the recognition of private divorces, meaning divorces that were not granted by a state court.

Under Rome III, a foreign law is not applied in European courts if men and women do not have equal power in divorce proceedings.

Many Germans are concerned about the recognition of foreign divorces, especially when they are based on Sharia. “Many people have a one-sided understanding of Sharia law. There are problematic areas in traditional Sharia law, which allows corporal punishment for criminals; is patriarchal and does not recognize gender or religious equality.

When foreign laws are applied in Germany, their effect is subject to scrutiny, such that if it results in gross injustice and a violation of fundamental rights, the state will correct it. This has been standard practice in Germany for 100 years now.

“This is an election year. Europe is losing faith. If the ECJ now said, ‘This is applicable; we will examine the individual cases,’ then the headlines would read: ECJ says Sharia divorce is valid. And then I would not like to see how anti-Islam groups such as Pegida, AfD and the like would react.”

The Deutsche Welle, article is available here.

 

The Hoff is Modifying Alimony

Posted by Ron Kauffman on

The Final Judgment for divorce is not always the end of the case. After the final decree has been signed by the judge, there can be disagreements over custody for instance, and people’s fortunes can change for the worse, leading to alimony modification.

The Hoff

Modifying alimony because of a change in circumstances is a matter actor David Hasselhoff knows well. I wrote before on the actor and his ex-wife, Pamela Bach, reaching a post-judgment agreement lowering his alimony payments to $10,000 a month in alimony, almost half of what he paid her previously.

The Baywatch actor originally filed legal documents in April 2016 to either completely cut off or significantly reduce spousal support to his ex-wife, whom he divorced after 16 years of marriage in 2006.

The Hoff’s request for alimony modification is based on financial reasons. In a later filing, he claimed he had “less than $4,000 in liquid assets” to his name, and that he “recently had to withdraw additional funds from my retirement plan in order to pay for my living expenses.”

The actor had also claimed he’d paid in excess of $2.3 million to his ex-wife since they divorced 10 years ago, not including the money he has spent supporting his daughters, who were teenagers at the time of the split.

Florida Alimony Modification

In Florida, in order to modify alimony, the paying party requesting alimony modification must show three fundamental prerequisites: (1) a substantial change in circumstances, (2) the change was not contemplated at the time of the final judgment of dissolution, and (3) that the change is sufficient, material, involuntary and permanent in nature.

There are many reasons for seeking an alimony modification in your payments: loss of a job, injury and retirement. The Supreme Court of Florida has addressed the impact of retirement on support obligations in Florida.

To determine whether a voluntary retirement is reasonable, courts must consider, in part, the payor’s age, health, and motivation for retirement, as well as the type of work the payor performs and the age at which others engaged in that line of work normally retire. There are additional criteria a court must consider as well.

Back to the Hoff

TMZ reports that Pamela Bach may be seeking alimony modification, only in the other direction: up. According to the article, a rep for Hasselhoff’s ex reports that she worked hard on David’s behalf during their marriage, which is more than enough reason to continue supporting her now.

Pam contributed a number of services toward his career — everything from consulting, accounting and handling administrative duties to keeping up with the house and kids … whom she still considers under her parental care, even at 25 and 27.

The TMZ article is here.

 

Property Division: Avoiding Mistakes

Posted by Ron Kauffman on

As CNBC reports, divorce can take an emotional toll, but property division mistakes during the divorce can leave you in far worse shape than you intended. And the more intertwined you and your spouse’s finances are, the more closely you’ll need to pay attention while untangling them.

Ideally, you’ll have an attorney and a financial consultant who are advocating for the best property division, and who know what they are doing.

Nevertheless, experts say that even if you’d rather spend as little time as possible thinking about the divorce, it’s worth making sure you understand the implications of all property division decisions being made.

Most people don’t file during the summer, partly because the kids are out of school, they’re vacationing and they’re not focused on their relationship.

Then there’s a rise after Labor Day because people want to get things going before the holidays hit.

Florida Property Division

I’ve written about property division before. Property division, or equitable distribution as it is called in Florida, is governed by statute and case law.

Generally, courts set apart to each spouse their nonmarital assets and debts, and then distribute the marital assets and debts between the parties.

In dividing the marital assets and debts though, the court must begin with the premise that the distribution should be equal.

However, if there is a justification for an unequal distribution, as in the Work divorce, the court must base the unequal distribution on certain factors, including: the contribution to the marriage by each spouse; the economic circumstances of the parties, the duration of the marriage, or any interrupting of personal careers or education.

Additionally, courts can consider the contribution of each spouse to the acquisition, enhancement, and production of income or the improvement of, or the incurring of liabilities to, both the marital assets and the nonmarital assets of the parties.

However, courts generally can’t base unequal distribution on one spouse’s disproportionate financial contributions to the marriage unless there is a showing of some “extraordinary services over and above the normal marital duties.”

CNBC’s Divorce Mistakes List

According to CNBC, if you are among those pursuing divorce, here are some property division mistakes to avoid:

1. Keeping a home you can no longer afford.

While staying put means one less change in the midst of an already life-altering event, it often makes little financial sense.

2. Taking the house in lieu of liquid assets.

If you are offered the house in exchange for your ex getting comparably valued investments — i.e., a retirement, bank or brokerage account worth the same amount — think twice before agreeing.

On paper the two may be equal, but practically speaking the house may be far more costly to maintain.

3. Ignoring the Tax implications.

Not all financial accounts are taxed the same way.

For instance, if you get the 401(k) plan account worth $100,000 and your spouse gets the checking account worth the same, you just got the raw end of the deal. Taking cash from the checking account incurs no tax, while any withdrawals from the 401(k) would be taxed as regular income to you.

Most people forget to look at the complete cost of each asset, particularly the tax nature of each.

4. Not getting a court order to get your piece of the 401(k).

If your soon-to-be ex has a 401(k) plan, you must have what’s called a qualified domestic relations order, or QDRO, to access your share. (Individual retirement accounts do not require a QDRO).

This court order, which must get final approval from your retirement plan, marks one of the few times you can take money from a 401(k) without paying a 10 percent early withdrawal penalty. You will, however, pay income tax on the amount if you don’t roll it over to an individual retirement account within 60 days.

5. Not Getting life insurance

Depending on how heavily you rely on child support or alimony (aka spousal support), the death of your ex could leave you in a financial jam.

Life insurance on the person, with you as the owner and beneficiary of the policy, can serve as protection against that potential loss of income.

The CNBC article is here.

 

Suing Your Spouse’s Lover

Posted by Ron Kauffman on

Historically, you could sue your cheating spouse’s lover. Although cheating comes up in divorce, suing your spouse’s lover is a different cause of action. In North Carolina, a man is now arguing that these laws violate his Constitutional right to engage in intimate sexual activity, speech, and expression with other consenting adults.

Alienation of Affection

American law used to recognize the tort of “alienation of affection” — causing a woman to lose affection for her husband and often to leave the husband because of the cheating lover.

The law also recognized the tort of “criminal conversation,” which basically consists of suing someone having adulterous sex with your spouse.

Many people think heart balm laws are dead. But a few states — Hawaii, Mississippi, New Mexico, Florida, South Dakota and Utah — still recognize them.

In North Carolina, Marc and Amber were a married couple. Amber is a nurse. The Defendant, Derek, is a medical doctor at the hospital where Amber works.

In early 2015, Derek and Amber began a sexual relationship. Marc discovered Amber was cheating on him with Derek, and sued Derek for alienation of affection and criminal conversation.

Derek tried to dismiss Marc’s lawsuit on the ground that common law causes of action for alienation of affection and criminal conversation are facially unconstitutional.

The trial court agreed with Derek, and granted his motion to dismiss. Marc appealed the decision.

Florida’s Heart Balm Statutes

I’ve written about heart balm statutes before, especially as they relate to engagement rings.

These common law torts are commonly referred to as “heart balm” statutes, because they permitted the former lovers’ heartaches to heal without recourse to the courts.

The purpose of the heart balm statutes was originally to prevent the perpetration of fraud by litigants who would use the threat of a breach of promise of marriage to force defendants to make lucrative settlements in order to avoid embarrassing publicity.

The Florida heart balm statute, originally passed in 1941, abolishes common law actions for alienation of affections, criminal conversation, seduction, and breach of contract to marry.

The Florida Legislature found that those who break engagements may be “free of any wrongdoing … [and may be] merely the victims of circumstances.”

The preamble declares it to be Florida public policy that the best interests of the people of the state are served by the abolition of the breach of promise action. Now, the rights of action existing to recover money for the alienation of affections, criminal conversation, seduction or breach of contract to marry are abolished.

Back to North Carolina

Surprisingly, the appellate court reversed the trial court, and found that the statute was not unconstitutional:

Our holding is neither an endorsement nor a critique of these “heart balm” torts. Whether this Court believes these torts are good or bad policy is irrelevant; we cannot hold a law facially unconstitutional because it is bad policy.

These common law torts are facially valid. They further the State’s desire to protect a married couple’s vow of fidelity and to prevent the personal injury and societal harms that result when that vow is broken.

Simply put, these torts are intended to remedy harms that result when marriage vows are broken, not to punish intimate extra-marital speech or expression because of its content.

The appellate court opinion is here.

 

Celebrity Prenups

Posted by Ron Kauffman on

Market Watch reports that Katie Holmes and Jamie Foxx were spotted holding hands in Malibu – the first time they were seen together – allegedly because Tom Cruise had a clause in their prenuptial agreement prohibiting her from publicly dating another man after their divorce for a period of time.

Strange Prenup Clauses

There’s been an increase in so-called “lifestyle clauses” in agreements in recent years. The increase, and prenups and marital agreements are subjects I have written about several times.

According to Market Watch, there are agreements which penalize everything from cursing ($100 for each “f-bomb”) to weight gain (eliminating alimony for a woman if she gained 25 pounds from her wedding weight).

For most prenuptial agreements, however, “lifestyle clauses” typically don’t include such demands. The can include requirements that children born from the marriage be raised in a certain country, or under a certain religion.

Strange clauses in agreements can also spell out what can happen during the marriage. For instance, some contract clauses regulate whether one or both parties could cheat, as well as rules dealing with physical appearances.

There is a big question as to whether these lifestyle clauses are enforceable. One bride-to-be limited her future husband to watching one Sunday football game with friends a month.

Another marriage contract limited visits from the bride’s mother-in-law. An increasing number of people who co-parent even have special clauses that limit the amount of time their partner can spend online.

Florida Prenups

Many think prenuptial agreements are for the wealthy or famous. But, you don’t always enter a marriage with riches, or guarantees that the bliss will last. It might not be a bad idea to have a plan in place.

Prenuptial agreements, or “prenups,” are contracts entered into before marriage that outline the division of assets in case of divorce or death. They typically resolve things like alimony, ownership of businesses, title of properties, in addition to the lifestyle clauses of celebrities.

There are many other, more mundane, concerns that can be addressed in the contract:

  • Caring for a parent
  • Going back to school;
  • Shopping habits
  • Credit card debt;
  • Tax liabilities;
  • Alimony and child support from previous relationships; and
  • Death or disability.

Lifestyle Clauses

Arguments are a known predictor of divorce. In order to avoid that, it is better to discuss with each other the terms of a prenuptial agreement when times are good.

Difficult talks about lifestyle choices, in-law visits, and money can uncover things that could be disastrous if put off until several years into the marriage.

Outlandish demands, such as “no public dating” clauses, are much easier to secure in a celebrity relationship than that of the average case. Strange lifestyle clauses are unusual in your basic prenup.

But the issues are different for someone like Tom Cruise, who could put a clause like that in an agreement, and has the leverage to get it.

The Market Watch article is here.

 

Hurricane Irma

Posted by Ron Kauffman on

We are continuing to follow weather reports. As you have already seen, this is peak Atlantic hurricane season, with a very powerful hurricane off our shores. Everyone is encouraged to take all possible precautions.

Our offices will be closed this Thursday and Friday, and remain closed through the weekend. We are planning to open again on Monday, but we will be monitoring the situation in the Atlantic closely.

Please know that our first priority during these times is public safety.

We hope you all stay safe and dry.

 

Should You Marry Someone From Another State?

Posted by Ron Kauffman on

When Wisconsinites choose a spouse, there’s just something about those Minnesotans that they find irresistible. Time magazine looked at over 100 million interstate marriages to make the analysis. The analysis also raises the issue of interstate custody.

Do We Marry Local?

Time magazine recently did an analysis of which states were most compatible when it comes to marriages. To figure this out, Time examined data on 116 million “interstate marriages” in which the partners were born in different states.

For people from each state, they looked at the most common home states for their spouses compared to the national average.

While people are generally most likely to marry someone from the same home state as themselves — eat local, and “marry local,” you might say — those who choose a spouse born in a different state don’t tend to drift very far.

To be clear, while Texans are much more likely than most other people to marry a Louisianan, there are still more total marriages between Texans and Californians, since California is such a large state. Whether you’re from California or your spouse is from Texas, if you have a child, this could have an interstate custody issue.

Your Interstate Child

I’ve written on the issue of interstate custody before, and was recently invited to speak at a state-wide presentation. There are two major interstate, uniform acts that have been adopted by almost every state in the U.S. The first, UIFSA, deals with interstate children support. The Second, UCCJEA, deals with custody.

UIFSA is a uniform act drafted by the Uniform Law Commission, and forcibly adopted by all U.S. states by federal law. Historically, multiple orders, issued by different states, created confusion; courts were unsure which orders were to be enforced, and it was easy to reduce, delay and evade enforcement by moving across state lines.

The purpose of UIFSA is to improve and extend the enforcement of duties of support so that once a foreign support order is registered in Florida, it has the same effect as a Florida order.

The UCCJEA, like the UIFSA, is another uniform act drafted by the ULC, and adopted by all U.S. states except Massachusetts. Different states have different approaches to issues related to custody, and inconsistent rulings about custody could create major problems.

The UCCJEA and the UIFSA share common features and concepts, and in places, the two acts have nearly identical provisions. However, they deal with different family law issues (custody and support) which can strongly impact how the two Acts are implemented.

The general purposes of the UCCJEA are: to avoid jurisdictional competition and conflict with other courts in child custody matters; promote cooperation with other courts; insure that a custody decree is rendered in the state which enjoys the superior position to decide what is in the best interest of the child; deter controversies and avoid re-litigation of custody issues; facilitate enforcement of custody decrees; and promote uniformity of the laws governing interstate custody issues.

Idahoans Love Utahans

According to Time, some of these bonds are stronger than others. While Michiganders are about equally likely to pair off with someone from Wisconsin, Ohio or Indiana, people from Utah and Idaho share a deep, mutual connection.

If you were born in Utah, for example, you are 15 times more likely to marry an Idahoan than someone from elsewhere — a bond that may be strengthened by the fact that they have the largest concentrations of Mormons, according to a 2013 Gallup poll.

On the other hand, most connections between states are not mutual. A person from South Dakota has the most disproportionate chance of marrying someone from North Dakota.

However, the North Dakotans have a slightly higher penchant for marrying Minnesotans, as do those from Wisconsin.

Likewise, Mississippi is the soul state for those born in Tennessee, Louisiana and Alabama.

The Time magazine article is available here.

 

Pet Alimony?

Posted by Ron Kauffman on

Sarah Bronilla is suing her ex-husband, Joshua Rosen, for over $32,000 in alimony. No, not alimony for herself, but for their pampered English bulldog, Lola. The case arising out of New York may be one of the first “dogimony” cases.

As the New York Daily News reports, when Sarah Bronilla and Joshua Rosen separated in 2012 – after six years of marriage – Rosen agreed he would pay Bronilla $200 in monthly “dogimony”, she says in her Manhattan Supreme Court lawsuit against him for pet alimony.

Florida Alimony

In Florida, alimony is governed by the Florida Statutes and relevant case law. The starting point in any alimony case is whether there is an actual need for alimony by a spouse, and the ability of the paying spouse to pay for alimony.

However, Florida Statutes are silent as to pet alimony.

I have written about divorce and pet issues several times. Pet custody, or who gets the pet dog, is a frequent problem. Alaska became the first state to enact a pet custody law.

A bill was introduced in the House of Representatives in Rhode Island which is very similar to the law of Alaska which was enacted this year. The Rhode Island bill requires judges to “consider the best interest of the animal” in a divorce or separation. Currently, there is no such provision in the works in Florida.

Florida does not have any pet specific custody or divorce laws. In fact, the alimony law is written in such a way that the court can only grant alimony to a party, not a pet of the parties.

Just because there is no specific law authorizing pet alimony does not mean: ‘that dog won’t hunt!’ People are free to enter into marital settlement agreements which make provision for support, such as pet alimony, that the law does not.

Those contracts could be enforceable as Mr. Rosen in New York may find out.

New York Pet Alimony

According to the New York complaint, Rosen not only agreed he would pay $200 in monthly pet alimony, or “dogimony”, Rosen also agreed to cover total food costs and half of the vet bills for the pet dog.

But the ‘deadbeat dog dad’ has skipped out on his financial obligations for pet alimony, Bronilla alleges in the lawsuit filed in Manhattan Supreme Court.

Bronilla says she has had to cover $12,000 for upkeep, $18,000 for food and $2,335 for health costs for the pooch, described as “fawn-colored” in the lawsuit.

In addition to the unpaid pet alimony, Bronilla claims Rosen owes her around another $100,000 related to their settlement agreement, including money from a portion of a business he sold.

The New York Daily News article is here.