Category: Planning for Divorce

The Risks of a Divorce Without a Prenuptial Agreement

Posted by Ron Kauffman on

Prominent Hollywood entertainment executive, David Geffen, may learn if there are risks in a divorce without a prenuptial agreement. Geffen is currently married to his husband of two years, David Armstrong, a 32-year old dancer. A California court will apply community property and other laws to determine what risks, if any, Geffen faces if he is not able to resolve his divorce amicably.

Divorce Prenup

Risky Business

Geffen rose from modest beginnings in Brooklyn to become one of the world’s best film producers and record executives. In rock and roll, Geffen is a founder of Asylum Records and Geffen Records. He has worked with Elton John, Cher, Weezer, Blink 182, Guns N’ Roses, and Nirvana.

As a film producer, Geffen’s credits include “Risky Business” and “Beetlejuice before forming DreamWorks SKG with Steven Spielberg and Jeffrey Katzenberg. DreamWorks won Best Picture for the films American Beauty, Gladiator, and A Beautiful Mind, and was later sold to Paramount for $1.6 billion.

Then in 2008, at ate 65, he mostly stayed away from the business. Citing “irreconcilable differences,” Geffen intends to pay alimony — generally for a duration of about half the length of the two-year marriage – which could be sizeable given Geffen has an estimate net worth of more than $8 billion. Most interesting though, the divorce petition indicates that the couple did not sign a prenuptial agreement.

Florida Prenuptial Agreements

I’ve written about prenuptial agreements before. Prenuptial agreements are about more than just resolving uncertainty in a marriage.

When a spouse is a major shareholder of company, such as a movie studio, the stock price can be subject to wide price swings. For example, when the head of Continental Resources was getting divorced, shares of his company dropped 2.9%.

Conversely, when Rupert Murdoch announced his divorce, shares of News Corp gained 1.4%. Why? Because in Rupert Murdoch’s case, the divorce announcement stressed his prenuptial agreement, and a divorce would have “zero impact” on the company.

A prenuptial agreement (or “prenup” for short) is a contract between people intending to marry. A prenup determines spousal rights when the marriage ends by death or divorce. This can be especially important in second marriages.

If you divorce without a prenup, your property rights are determined under state law, and a spouse may have a claim to alimony while the suit for divorce is pending and after entry of a judgment.

That’s where prenups come in. Prospective spouses may limit or expand state laws by an agreement. Prenups are also used to protect the interests of children from a prior marriage, and to avoid a contested divorce. Prenups can be a reliable guide down rough rivers if they’re done right.

Little Shop of Horrors?

Marrying without a prenuptial agreement may not have to be a horror show, but will likely be more expensive than marrying without one for Geffen. He has many things in his favor going into settlement negotiations.

Geffen and Armstrong have a short-term marriage of two-years. Armstrong is 32 years old, and at age 82, Geffen is rumored to have slowed down in business. These facts may work out in Geffen’s favor financially.

It’s not clear why Geffen, a highly successful businessman, did not have a prenup. Early indications are that the divorce is amicable so far, which could suit everyone well.

The New York Times article is here.

Residency for Divorce

Posted by Ron Kauffman on

Ireland is currently working on the wording of what the Irish electorate will be asked to vote on in the upcoming divorce referendum. Residency for divorce is an issue about the amount of time a person has to live in a state, and in some cases, live apart from their spouse, before they can file for divorce.

residency for divorce

Luck of the Irish

If the luck of the Irish holds out and the referendum is passed, the government would introduce primary legislation on the time period before you can get a divorce, rather than having it in the Constitution which must be put to a public vote when changes are proposed.

Under the current system, married couples need to have lived apart for at least four years during the previous five years. The new proposals would see that reduced to two years, with the Irish Legislature, the Oireachtas, providing the legislation for this.

The referendum is due to take place on 24 May, the same day as the local and European elections.

Florida Divorce Residency Requirement

Ireland is not alone in having a residency for divorce requirement before spouses can file a case. Most U.S. states for example, have some kind of a durational residency requirement for the plaintiff in a divorce and others add to that a requirement you live apart first.

I’ve written about things to consider when planning for divorce before. Residency for divorce is a very important jurisdictional requirement in every case.

Generally, the non-filing party need not be a resident in the state in order for the court to divorce the parties under the divisible divorce doctrine. The court’s personal jurisdiction over the non-filing spouse is necessary only if the court enters personal orders regarding the spouse.

The durational domicile or residency requirement goes to the heart of the court’s ability to divorce the parties, because the residency of a party to a divorce creates a relationship with the state to justify its exercise of power over the marriage.

What are some of the time limits in the United States? For example, Florida has a six-month requirement for residency before you can file for divorce here.

By contrast, Iowa has a one-year residency requirement for all spouses filing in the state. The same is true for Maryland, which requires that at least one spouse be a Maryland resident for at least one-year before filing for divorce. Maryland law also requires the couple to live apart for at least 12-months before filing for divorce.

The rule sounds easy enough, but failure to adhere to the rule may cause the court to enter a divorce decree without having the proper jurisdiction. In that event the divorce decree could be called into question.

The Irish Journal article is here.

 

Social Security and Divorce – Plan Ahead

Posted by admin on

On behalf of Ronald H. Kauffman, P.A. posted in Planning for Divorce on Monday, August 12, 2013.

Anyone planning for divorce needs to consider the impact of Social Security benefits. This is especially true if you are close to the age at which you become eligible for benefits, but haven’t started to receive them yet. If you think Social Security claims, benefits and entitlements are confusing, you are not alone.

In general, once you are divorced, you can receive spousal Social Security benefits based on an your ex-husband’s or your ex-wife’s earnings, as long as your marriage lasted at least a 10 years, you are a minimum of 62 years of age, are not married, and do not qualify for a higher benefit based on your own past earnings.

As a matter of divorce planning then, and theoretically, if you were only married 9 years, you may want to put your divorce plans on hold so that you could receive spousal benefits.

Additionally, if an ex-spouse delays claiming Social Security benefits until full retirement age, they can start to collect a spousal Social Security benefits check of 50% of an ex-spouse’s retirement benefits.

They might also be able to continue working – and even increase the eventual amount of their own personal Social Security retirement benefits – by delaying retirement, until age 70. When an ex-spouse reaches age 70, their Social Security monthly retirement check would be approximately 132% larger than it otherwise would have been, and even larger depending on annual cost of living increases.

One complication is that a divorced spouse can only receive a spousal Social Security benefit 2-years after a divorce, if an ex-spouse has not yet applied for his or her own retirement benefit.

There are a lot of other Social Security Administration rules which can complicate this straightforward analysis. The rules regulating Social Security could change at any point in time, and suddenly delayed benefits might no longer be recognized. Or the criteria for divorcing spouses can be changed to 5 years from the 2 years stated above.

What happens if the Social Security rules change? It may depend on the status and wording of the law at the time you divorce. So, not only can the current rules cause you immediate problems, but the plans you made – which were correct at the time you made them – might be wrecked by a rule change.