Dividing Property and Debts in a Divorce

Dividing Property and Debts in a Divorce

When facing divorce, often times the most difficult and time consuming task for the couple is determining how to divide the property and debts.  If both spouses are involved and working toward a common equitable goal, then the division can be accomplished jointly and with less complication.  If the parties do agree on the separation of property and assignment of debts, it is very important to note that the division is not final until the judge signs the order.

In a divorce, each spouse retains his or her separate property and debts, while the community property and debts are divided between the spouses.  The first step is to make a list of all the assets, indicating value and whether the asset is separate or community property.  In California, assets and debts that are accumulated during marriage are presumed to be community property.  Separate property is that which the spouse owned before marriage or inherited or acquired by gift during the marriage.  If either spouse acquires property after the separation but prior to the final divorce order, the property is presumed separate property.  Unfortunately, separate property can inadvertently become community property if it is combined or “commingled” with marital property.

Once the asset list is created, how does the couple decide who gets what property?  Because the property should be divided fairly equally between the spouses, the couple has options:  they can assign certain assets to each spouse; sell assets and divide the proceeds; “buy out” the other spouse; or continue to own an asset jointly after marriage.  Owning property together after a divorce is not common, and when it occurs, it usually involves the family home and the desire to maintain stability for the children.  The couple must also assign all debts to each spouse, noting that the separation of debts is not binding on creditors, and therefore, they can attempt to collect the debt against either spouse.

If the spouses cannot agree on the division of property and debts, then the court must decide.  Mediation can be very helpful if the couple is unable to determine an equitable separation of property and debts.  Why would the couple be unable to reach agreement?  Complications may arise if the assets and debts are significant or evoke an emotional response, such as a family-owned business, a valuable retirement plan or pension, or a second home.  It can be very challenging to reach an agreement, especially if the divorce is already contentious.

Because some assets may appreciate or depreciate, be illiquid or difficult to sell, or have tax implications, each spouse should be aware of the financial and tax consequences of owning a particular asset.  If both spouses understand the implications of dividing the assets and debts, then they will be better equipped to amicably reach an agreement.

Mike's Top FAQs About Divorce

How is a military pension divided in a divorce?

How is a military pension divided in a divorce?

Divorce proceedings are conducted by state courts and they can divide military pensions. The federal Uniformed Services Former Spouses’ Protection Act (USFSPA) allows (but does not mandate) state courts divide military retirement pensions upon divorce, legal separation or annulment.

How much of the pension gets divided?

The share of a pension to the non-military spouse could be as low as nothing or as high as half.

  • The non-military spouse might get 50 percent of the pension only if the marriage lasted the service member’s entire military career.
  • If the marriage lasted for part of the military career, the pension division will probably be prorated to reflect the time the spouse served in the military.

How an ex-spouse gets paid?

The USFSPA has a 10/10 Rule which states that if the couple was married for ten or more years while a spouse performed at least ten years of service, the government will make payments directly to the ex-spouse.

If this rule doesn’t apply, but the non-military spouse is awarded a portion of the pension payments, the service member gets paid the entire amount but will be obligated to the correct portion to the ex-spouse.

Another way to get paid is to have an actuary evaluate the military spouse’s pension to determine its current cash value. The military spouse would then give the other spouse an equivalent value in cash or non-marital property, leaving the military spouse with exclusive rights to the pension.

Posted in: Divorce, Family Law, Military Divorce, Property Division

How are disability payments to a military veteran handled in a divorce proceeding?

How are disability payments to a military veteran handled in a divorce proceeding?

The federal Uniformed Services Former Spouses Protection Act (the “USFSPA”) permits divorce courts to award ex-spouses of service members part of “disposable retired pay” (the retired pay available (after necessary deductions) based on salary and years of service). How that’s divided is decided by an agreement between the parties or by the judge.

  • Under the USFSPA, military disability pay is not “disposable retired pay” and is not subject to division in divorce.
  • If a service member waives retired pay in order to get disability pay, an ex-spouse can lose out on hundreds or thousands of dollars which they might have received.

There are two kinds of military disability pay and both are excluded from the USFSPA definition of disposable retired pay:

  1. Military Disability Retired Pay: This is for those are disabled such that they can’t perform their military duties.
  2. VA Disability Compensation: This type of compensation from the Department of Veteran’s Affairs (VA) covers injuries or disabilities that occurred while on active duty, or which were made worse by active service, including service related (not necessarily combat related) mental or physical injuries.

To get these VA benefits, a service member must waive a certain amount of retired pay. If this is done, the amount waived is subtracted from the amount available to the former spouse.

Spouses can have some protections or take steps to get the maximum payments:

  1. If there is a separation or property agreement, it should include a provision stating if the service member waives any retired pay for disability pay, the service member would make a monthly payment to the non-military spouse in an amount that makes up for the lost retired pay.
  2. If there is no such agreement and the divorce issues are being litigated, the judge can be asked to retain jurisdiction to order the military member to pay spousal support in the future, or to modify an existing alimony order based on any change in the parties’ circumstances. If retired pay is reduced because of disability pay, the non-military ex-spouse could request the judge to order the military member to pay spousal support (or increase it) to make up for the retired pay that’s been lost.

 

Posted in: Divorce, Family Law, Military Divorce

What is the Service members Civil Relief Act (SCRA) in a Military Divorce?

What is the Service members Civil Relief Act (SCRA) in a Military Divorce?

The SCRA was enacted in order to help protect service member’s rights if and when they are called to active duty. It protects regular service branch members, in conjunction with members of the Coast Guard serving on active duty in support of the armed forces, members of the National Guard when serving in an active duty status under federal orders, and Reserve members who are called to active duty.

The SCRA affords the right for any court proceedings to be put on hold, or provided a “stay” to postpone any administrative activity if a member’s active duty has an effect on their ability to proceed in the case.  This specifically applies to child custody issues as well and a stay of court and administrative proceedings would be afforded in order to protect the non-present spouse’s parental rights. The SCRA would be incredibly helpful if a spouse were to attempt to change the status of child custody while the service member is deployed.

A ninety-day stay is automatically granted when a service member requests this protection in writing. However, any further delay is decided at the discretion of the judge, hearing officer or magistrate that is assigned to the matter. This protection is not afforded nor does it protect a member’s invocation right for any criminal court proceedings.

There are also many individual state laws related to military child custody. Through the USA4 Military Families initiative, the DoD is partnering with states in order to further support military families. Specifically USA4 Military Families is striving to educate policymakers and ensure deployment separation does not determine child custody decisions.

Posted in: Divorce, Family Law, Military Divorce

What is a Family Care Plan for Child Custody in a Military Divorce?

What is a Family Care Plan for Child Custody in a Military Divorce?

As with normal civilians, military couples are presented with child custody issues if they are seeking dissolution of marriage. Members of the military are aware that active duty often requires time away from home due to deployments, training or frequent relocations. These factors may present custody issues, however there are ways to prevent or relieve some of the stresses that can evolve in a military divorce regarding child custody matters.

A Family Care Plan is highly recommended and sometimes required in order to clarify necessary details about the care of your child if a service member is called to active duty or deployed at no notice. Although most couples aren’t required to establish a family care plan, if you are or become a single parent due to death of spouse, separation/divorce, a service member can remain active but must meet the family care requirements of DOD – essentially requiring such members to have a “family care plan.”

A Family Care Plan is a set of documents describing who will care of your child during specific instances or if a military member is away on deployment or training. When it comes to a Family Care Plan there are some slight differences depending on the service, however most have three basic requirements: short-term care providers, long-term care providers, and care provision details. These support details include naming who will care for the child, financial details, medical specifications, and logistical considerations pertaining to food, housing, transportation, etc. These named care providers must be a non-military person, who agrees, in writing to accept the care of the member’s child or children. This person will also sign the Family Care Plan, indicating they consent and understand the responsibilities they are being entrusted with.

Posted in: Divorce, Family Law, Military Divorce

Can parents create their own agreement for child support?

Can parents create their own agreement for child support?

Yes, parents can stipulate their own agreement regarding child support, but it must be approved by the court. In order for the court to consider reviewing the agreement, it must meet the following guidelines:

  1. There must already be an open court case between the parents.
  2. The agreement must contain the following information:
    1. Each parent is fully aware of his/her child support rights.
    2. Each parent is aware of what the guideline child support amount would be.
    3. Neither parent is feeling pressured or forced to agree on the stated amount.
    4. Neither parent is receiving public assistance or has applied for public assistance.
    5. Both parents think that the agreed upon amount is in the best interest of the child.

After you have reached an agreement with the other parent and have created a stipulation consistent with these guidelines, you will both need to sign the document. If you do not have attorneys, your signatures will need to be notarized. You can then submit the stipulation for the court’s review. If you have a court date scheduled, you can bring the stipulation with you to the hearing for the judge’s review and signature, or you can go to the courthouse and ask to speak with a family law clerk to get it approved and signed.

After you have received the judge’s signature, you’ll need to file the original with the court clerk, and serve a file-stamped copy of the order on the other parent (or their attorney, if they have one.)

Posted in: Child Support, Family Law