Family Law

Divorce Valuations – Property Divisions

Valuation of Non-Economic Contributions with Respect to Property Division in Divorce

The concept of equitable distribution of marital property takes into consideration both economic and non-economic contribution of the spouses towards marital property acquisition. During divorce, all marital property is divided between the spouses according to the distribution scheme available in the state where the divorce occurs. Unequal division between spouses can result from factors such as the length of the marriage, the property brought to the marriage by each party, whether one party has substantial assets not subject to division, the parties’ contributions to the marriage, and other factors. Spouses’ non-economic contributions have become a major factor in the division of marital assets during divorce. Sometimes, they are mentioned as the “services rendered by a spouse.” Non-economic contributions become a critical factor in cases where the contributing spouse does not work at all.

Usually, a party’s testimony about their efforts may suffice to prove the non-economic contributions. More substantial evidence may be required in the case of a long-term marriage in which the parties have accumulated significant assets and one spouse has not been employed outside the home after many years of marriage. In such cases, it usually is the responsibility of the spouse who has contributed the non-economic services to establish the contributions and their economic value.

Replacement Cost Approach

One way to establish the value of non-economic contributions is the replacement cost approach in which in which assumptions are made regarding a wage rate for the contribution performed. The general replacement analysis simply hypothesizes hiring outside help to perform the role filled by a non-economic contribution, such as housekeeping services.

Opportunity Cost Approach

In contrast to the replacement cost approach, the opportunity cost approach focuses on the value of the occupation that was forfeited by the spouse who claims the non-economic contribution. This approach assumes that, if there is a typical occupation in the market place that the spouse reasonably could have performed, he or she forfeited that opportunity in order to make the non-economic marital contribution. In theory, that contribution would be equivalent in value to the career opportunity that was “lost” due to the marital contribution.

Conclusion

In situations in which of one of the divorcing spouses does not work at all, non-economic factors may be taken into account by the court when distributing the parties’ property.

Temporary Order for Protection of the Person in Divorce

In the divorce context, a temporary order for personal protection (sometimes called a “restraining order”) is a court order prohibiting a spouse from contacting or harming the other spouse. Protection orders are common in situations involving spousal abuse or harassment. The orders usually are kept in place for the duration of the divorce case.

In order to obtain a temporary order for protection, a party usually must petition the court and present some measure of cause for the request. Once the prerequisites are met and the required evidence is provided, the judge will decide, usually immediately, whether to issue a temporary protection.

Courts may issue an order of protection to:

Restrict the restrained party from having any contact with the petitioner, including harassment and threats; Prevent the restrained party from appearing at the petitioner’s home, jobsite, or school, and/or from appearing at the parties’ children’s schools or daycare facilities; or Compel the restrained party to vacate the petitioner’s home if the two are living together After a temporary restraining order is issued, the issuing court usually will schedule an initial hearing to decide whether a permanent order is required. In theory, temporary orders for protection are registered in a nation-wide computer system and are enforceable throughout United States. In practice, it can be difficult to establish the evidence necessary to enforce a restraining order against a determined spouse. Prohibited contact when no witnesses are around can be difficult to prove, and relying on an over-worked police force to intervene in specific instances can prove fruitless. In most cases, it is a crime to violate restraining orders.

Impotence as Grounds for Annulment of Marriage

Introduction

Annulment is a legal proceeding initiated to terminate an invalid marriage. Annulment differs from divorce in that it is retroactive and leaves the parties to the annulment in the same position as if the marriage never happened. Annulments are typically granted when the divorce was never legal to begin with. Statistically, annulments are very rare compared to divorce because the grounds for annulment are very narrow and because of the availability of no-fault divorces.

The grounds for annulment vary state by state, but generally involve some type of fraud or bigamy. Other grounds include physical incapacity, impotency, nonage, force or duress, mental incapacity and consanguinity.

Impotence

In some states, impotency can be grounds for annulment. If a spouse is physically impotent and the other spouse was unaware of the impotency prior to the marriage, the marriage can be voidable in some states. If a marriage was never consummated, this can constitute viable grounds for annulment. Impotency occurring after marriage is generally not in itself ground for annulment.

Some courts have ruled that an annulment based on impotency can be granted based not only on actual physical impairment, but it can also be based upon emotional or psychological factors.

When requesting an annulment of marriage on the ground of impotency, the requesting spouse must show that the impotence or physical incapacity is permanent and incurable. The plaintiff has the burden of proving that the defendant’s condition is incurable and it exist at the time of marriage. In many states the courts are granted the power to order a physical examination of the defendant and a failure to take the physical examination will justify the court’s concluding that the defendant is impotent.

Conclusion

Annulment is a complicated action to invalidate a marriage and return the parties to their pre-marital status. It is rarely sought because the grounds are so narrow and generally must be based on an issue existing at the time of the marriage that would have prevented a valid marriage. In some states, impotency can be the basis on which to seek an annulment

Alimony – Temporary Support

Temporary alimony is the same as temporary spousal support, and both provide sustenance to the dependent party through the course of a divorce case. During the proceedings, the dependent spouse and the parties’ children may require financial support, and courts may grant temporary support for that purpose. Dependant spouses can seek temporary support during legal separation as well.

There usually is not a precise formula for calculating temporary support. Courts should evaluate the independent spouse’s ability to pay and the reasonableness of the temporary support claim before awarding temporary support. Courts usually consider the dependent spouse’s needs along with the parties’ ordinary standard of living in determining an award. Limited-term support sometimes is called “rehabilitative maintenance,” as it is designed to maintain a supported spouse’s financial stability for the time it takes him or her to be rehabilitated. This sort of maintenance often is awarded during times in marriage where one spouse has deferred career and/or education for the family’s welfare.

Temporary spousal support can be defined for a specific period of time, and a specific date usually is identified for the court’s approval. Spousal support can be terminated by the occurrence of an event such as remarriage, death of another spouse, court order, and financial windfall. For federal income tax purposes, temporary support is tax deductible to the paying spouse and is ordinary income to the receiving spouse. In many states, support also can be made payable in a single lump sum. Some states use a statutory formula for calculating support awards based on parties’ financial status during the marriage.

Temporary support is awarded to the supported party to minimize financial hardship and unfairness, usually when the supported spouse is not as strong financially as is the supporting spouse. In that way, the legal system strives to provide equal treatment for both the spouses involved in divorce or separation proceedings. Temporary support helps protect the supported spouse’s assets and credit during the proceedings.

Some states grant support for up to three years for supported spouses with more than ten years of marriage, but this can differ with circumstances and the case. The parties also can waive alimony, provided that it is understood that support generally is not sufficient to cover the supported spouse’s expenses or outstanding debts.

Lump Sum Spousal Support

Introduction

Spousal support can be one of the most difficult issues to resolve in divorce. Spousal support, which is also referred to as alimony, involves an obligation by one spouse to make financial payments to the other spouse. Permanent spousal support involves the payment of support after a divorce is granted and until a further court ruling modifies or terminates the obligation. Permanent spousal support may be ordered in situations involving long-term marriages or in situations where one party cannot earn a living due to a disability or injury. Such spousal support can be paid in lump sum or on monthly basis.

Courts consider certain factors when ordering the payment of spousal support, including the length of the marriage, the age of the parties, their relative incomes, the tax implications of the support award, any economic advantage or disadvantage due to marital breakdown, and arrangements with regards to child support and custody. Several states allow lump sum support, including: Alaska, Florida, Kansas, Louisiana, Maine, Michigan, Nevada, New Mexico, North Carolina, Ohio, Oregon, South Carolina, Virginia, West Virginia, and Wyoming.

Lump Sum Payments

Once the court has determined who is to pay spousal support, the next issue that arises is the method of payment and duration of spousal support. Spousal support generally is payable on a monthly basis until terminated by court order or remarriage. However, an agreement allowing for a single lump sum payment may be reached depending on the circumstances of the case, the parties’ desire to have such an arrangement, and the paying spouse’s financial ability to make a single payment.

There are advantages of lump sum spousal support, including the parties’ peace of mind and closure. Once the lump sum amount is paid, the payor spouse may obtain a release from the recipient spouse from further obligations of spousal support. In this way, the payor spouse avoids or considerably reduces the risk of later claims by the recipient spouse to vary the spousal support arrangements earlier agreed upon. Additionally, the recipient spouse has a lump sum amount available which he or she can immediately use and/or invest for financial stability. The recipient spouse would not have to rely upon someone sending him/her a check every week or every two weeks or every month.

However, there are also certain disadvantages to lump sum spousal support, including the tax implications of receiving a large support payment that is referred to as “alimony.” Another disadvantage is the lack of a guaranteed income in the future and the possibility that the lump sum payment is less than the total payout possible under a monthly support schedule.

Conclusion

In light of all of the different factors that can impact the award of spousal support, including the varying requirements under state laws, the advice and counsel of an experienced family law attorney can help explain your rights and obligations with respect to such awards.