THE CHANGE CAME SLOWLY AND WITHOUT ANY FANFARE, BUT MOST states now use the term dissolution of marriage for what used to be called divorce. And so, the official name for the court order that ends the union between two spouses is typically “Decree of Dissolution of Marriage.” Of course, the name change hasn’t stopped the rest of us—including attorneys—from talking about divorce, so I’ll stick with the familiar moniker in this chapter.
The first thing you need to know about divorce is that the U.S. Constitution doesn’t give a married couple a right to divorce. Neither has the U.S. Supreme Court ever found such a right implied as part of our broader rights. Consequently, it’s up to individual states to dissolve—or not dissolve—marriages. The consequence is that divorce law varies considerably from state to state. What is universally true across the United States is that it’s surprisingly easy to establish a marriage, but much more of a hassle to terminate one:
The state government that didn’t ask about finances, or property, or even if either party had children before the wedding, now looks exceedingly closely at all of these things when granting a divorce.
The state government that didn’t require any “how to stay married” training may now require the spouses to take part in counseling designed to save the marriage.
The state government that let a couple get married on the day that they met may now insist that they spend a considerable time apart (perhaps a year or two) before allowing a no-fault divorce.
The state government that never asked the reason a couple wanted to get married (or even fully defined what marriage means) now may invoke a short list of precisely specified reasons for ending their union.
Finally, the state government that said “Congratulations!” when two of its residents married abroad during a weekend jaunt may now refuse to recognize a quickie divorce granted by authorities in the same foreign country.
The maxim “easy marriage, hard divorce” was coined in the nineteenth century, when few states required marriage licenses and many made divorce almost impossible. Times have changed, but most couples seeking a divorce find this an annoyingly realistic description of the state of everyday law.
To be fair to state legislatures, the legal complexity of dissolving a marriage is largely a reflection of the fact that a marriage union becomes increasingly complicated as a couple has children, acquires possessions, and faces many different state-imposed obligations. Consequently, it’s not that surprising that ending a marriage is a fairly involved process.
Three things happen during a typical divorce proceeding:
1. The couple’s money, property, and debt are appropriately divided between the divorcing spouses—and one spouse may be ordered to provide separate maintenance (alimony).
2. The custody of the couple’s minor children is determined—along with visitation rights and child support.
3. The court issues a “divorce decree” that dissolves the marriage—terminating spousal obligations and allowing the parties to remarry, if they choose to.
The “Are They Still Legally Married” Game
Eddie and Teddie established a valid common-law marriage in the State of Confusion—a common-law marriage state—(see Chapter 5) by holding themselves out as married to their friends and family, and by buying a house together as husband and wife.
After a decade of slowly decreasing marital bliss, they decided to part. They sold their house, Eddie moved to the State of Regret, and both he and Teddie began to hold themselves out as unmarried individuals.
Are Eddie and Teddie still legally married?
Yes! There is no such thing as common-law divorce. As the U. S. Supreme Court noted in Maynard v. Hill, in 1888:
The consent of the parties is of course essential to its existence, but when the contract to marry is executed by the marriage, a relation between the parties is created which they cannot change.
Other contracts may be modified, restricted, or enlarged, or entirely released upon the consent of the parties. Not so with marriage. The relation once formed, the law steps in and holds the parties to various obligations and liabilities.
I highlighted the 19 words in the Supreme Court’s observation that are most important when you read this chapter: Unlike other contracts, the parties to a marriage can’t change the terms on their own. Moreover, the state imposes obligations on both husband and wife. Here, for example, is a succinct statement from Delaware law: “The duty to support a spouse rests upon the other spouse.”
If Eddie and Teddie want to end their marriage they will have to seek either a divorce or an annulment—legal procedures that will dissolve their union or declare it void—but which may impose a new set of ongoing obligations on him or her.
Eddie is willing to seek a divorce, but Teddie worries there is still a stigma attached to divorcing—she would rather have their marriage annulled. After all, she reasons, they never really exchanged vows in front of a pastor or a state official, so perhaps they qualify for an annulment. They go to an Internet site that offers do-it-yourself annulments, fill out the required legal complaints, and file the paperwork at their local courthouse.
Will they soon be free of each other?
Probably not—although they may give a local judge a chuckle or two.
Annulments are available in all states, although the advent of no-fault divorces has dramatically reduced their use. The key to understanding annulment is to zero in on the heart of the word: the three letters nul. This comes from the Latin word nullus that means “not any”—in short, nothing.
An annulment declares that the union between two people is nothing—that it never existed. Over the years, courts have identified two kinds of marriages that can be annulled:
1. Void marriages—These are unions that never existed, most often because one party was already married, or is mentally incompetent, or because the two parties are too closely related.
2. Voidable marriages—These are unions that a court could declare void but which will remain intact if no one challenges their validity. Most voidable marriages become completely valid as time passes. We looked at one example of a voidable marriage in Chapter 5: A judge will void a marriage where one or the other party is underage—if the validity of the marriage is challenged while age is still an issue. But if the parties quietly cohabit until both are older than the legal age to marry, their marriage becomes fully valid. (It is no longer voidable.) Another example of a voidable marriage is a union formed under duress—the classic shotgun wedding. However, if the groom doesn’t complain within an allowable period of time (which varies from state to state) the marriage is considered fully valid because he has ratified the union.
ARE MARITAL OBLIGATIONS ALSO ANNULLED?
Teddie had read enough about annulments to realize that their best chance of getting a judge to grant one lay in claiming her marriage to Eddie was based on fraud that goes to the very essence of their marital union. In other words, one of them will have to prove that the other party intentionally concealed or misrepresented a fact that is so vital to the relationship that had the deceived party known the truth, he or she would not have consented to the marriage. A few possibilities:
One party conceals sterility or other impediment to having children.
One party conceals his or her intentions not to have sexual relations after the wedding.
One party intends to continue an ongoing sexual relationship with another person after the marriage.
One party conceals a record of past felony convictions.
One party conceals a serious infectious disease such as HIV.
The woman falsely claims she is pregnant or falsely states that she is not pregnant by another man.
Teddie also knew that many deceptions are not considered serious enough to justify an annulment on the basis of fraud. Because the law of annulment tries to preserve marriage when possible—few judges are willing to hold that the very essence of the marital union is shattered if any one of the following occurred:
One party concealed his or her nasty temper, alcoholism, or unpleasant medical condition (for example, incontinence)
One party misrepresented his or her true wealth, occupation, or education
One party falsely promised to seek a job after the wedding
One party “changed” after the wedding—becoming less caring, less polite, even cold
One party concealed an intention to “let him- or herself go” after the wedding and subsequently became less attractive
After a bit of thought, Teddie concludes that she never would have agreed to their common-law marriage had Eddie told her the truth about the large credit card debt he owed. She offers proof of her assertion: an affidavit executed by Eddie that admits he didn’t disclose his credit card debt to Teddie.
Will her argument convince the judge? I tend to doubt it because Teddie and Eddie seek the annulment of a supposedly voidable common-law marriage that took place in another state. Even if concealing a debt is sufficient fraud, how can the judge be sure that Teddie and Eddie didn’t hold themselves out as married after she learned about his proclivity for plastic? If so, Teddie can’t claim to have been deceived by Eddie before their marriage.
Teddie has made her peace with getting a divorce, but Eddie insists that they file for a no-fault divorce (see below) that doesn’t assign blame for the break-up to either spouse. In the State of Regret, this requires that the spouses live apart for more than a year. One of the couple’s friends suggests that they get a legal separation in the interim—so Eddie researches the possibility.
A legal separation doesn’t terminate a marriage. The couple remains legally married—and so neither party can remarry—but the two live apart under the terms of a decree of legal separation that outlines the rights and responsibilities of each spouse. Generally speaking, the usual obligations of marriage end, and the parties no longer acquire marital property or take on joint debt. The court creates (or preferably approves) a separation agreement that defines how marital property, debts, and tax obligations will be divided—and sets the terms of spousal support (alimony). Some states allow the separation agreement to address child custody, child support, and visitation schedules. Others require a separate parenting plan agreement.
Why would a couple choose legal separation rather than divorce? In fact, a few states don’t even provide the option. Most states do, however, because of the following:
Some couples don’t want an absolute divorce—sometimes for religious reasons, other times because dissolving their marriage will end spousal health insurance coverage or preclude certain spousal pension or social security benefits that require ten years of marriage.
A couple may not meet the strict residency requirements for a divorce, but have resided in the state long enough to qualify for a legal separation.
A couple may hope to eventually reconcile—and see legal separation as a way to “cool off” their conflict.
Many divorcing couples see a legal separation as an intermediate stopover point on the road to absolute divorce—a way to protect their individual property interests before the marriage is actually dissolved. (A judge is likely to use a separation agreement as the template for final property distribution during a divorce.)
DIVORCE FROM BED AND BOARD
When Eddie and Teddie decide that a legal separation isn’t for them, the helpful friend offered another suggestion: “You don’t have to wait a year for no-fault divorce. You can get a divorce in a few days—and have a great vacation at the same time.”
Their friend gave them an illustrated brochure that seems an answer to their prayers. “Why Wait to Get a Divorce?” the headline proclaims. “Come to the Duchy of Grosse Fenwick,” the sales pitch goes on, “and solve all your problems in three glorious days of fun and enchantment. Our unique weekend package program includes deluxe rooms for you and your soon-to-be-ex spouse at separate Fenwickian casino resorts, full-day spa treatments, guided tours of our fairy-tale countryside, admission to two dinner shows, and the world’s easiest divorce.
“You don’t need a lawyer. Our friendly English-speaking judges come to your rooms and deal with the formalities quickly and painlessly. You’ll leave Grosse Fenwick with a stunning divorce decree that’s suitable for framing—an 11-inch by 14-inch document, hand calligraphed on the finest parchment, embossed with the national seal of Grosse Fenwick to attest its authenticity.”
Eddie and Teddie were wise enough to check with Conrad, a lawyer friend, who explained. “A high-speed Grosse Fenwick divorce is granted via a special legal process that is available only to foreigners who enter the country on a tourist visa. Simply put, the Duchy set itself up as an overseas divorce mill. The State of Regret (and most other states) decline to recognize the validity of a Fenwickian divorce granted to anyone other than the legal residents of Grosse Fenwick.
“A person has to live in Grosse Fenwick for 90 days—and hold an immigrant visa—to be considered a valid resident. He or she can apply for a no-fault divorce after residing in the Duchy for at least 180 days. The State of Regret will recognize that form of marital dissolution—although we reject the quickie kind.”
Teddie jumped in. “But the brochure says . . .”
“That you’ll receive a divorce decree . . . and you will. Trouble is, it won’t be worth the parchment it’s written on. The full faith and credit provisions in the U.S. Constitution don’t apply to divorces granted by Grosse Fenwick, although the State of Regret will usually honor the principle of comity. We extend to Grosse Fenwick the courtesy of recognizing their legitimate judicial decrees—and Grosse Fenwick recognizes ours in return. However, we draw the line at money-making schemes.”
To be perfectly frank, there are a few states that will recognize quickie divorces from certain overseas countries. A local family lawyer is likely to know which decrees will be recognized and which will not. Keep in mind, though, that a legal quickie divorce may dissolve a marriage but will probably leave the complex issues of property distribution, spousal support, child custody, and child support up in the air.
Fault-Based and No-Fault Divorces
When Eddie and Teddie run out of alternatives, they’ll need to file for a divorce. With the possible exception of wills, there’s no topic of everyday law that receives more attention in books and on websites aimed at non-lawyers This is not surprising given the vast numbers of people at any given moment who are going through a divorce or pondering the possibility. Eddie and Teddie compare notes and verify that divorce is the process through which a marriage is dissolved and a new set of legal rights and obligations are determined (regarding marital property, spousal support, child custody, and child support). Every state provides for the divorce of its residents. Some states make the process simple enough to complete without a lawyer, if both parties agree to the divorce (an uncontested divorce), there are no property distribution issues, and (usually) there are no children of the marriage who are still minors.
While this is true of some divorces, many dissolutions involve disputes over property, money, and children. Fighting during these more complex divorces seems inevitable, considering that the chronic inability to agree about essential things is a key factor that prompts many couples to dissolve their marriages. For this reason, it usually makes sense—despite the cost—for each party to be represented by an independent lawyer.
Speaking of cost . . . you may have seen the bumper sticker: Marriage is grand, but divorce is a hundred grand. Happily, that’s an exaggeration unless one or the other spouse has lots of assets to fight over and the legal battles turn into “family nuclear wars.” The best way to control the cost of a divorce is for the parties to work out as many of the issues as possible by themselves.
Not that many decades ago, most states granted divorces only when one of the parties behaved in a way that could be said to have destroyed the marriage. In other words, there was sufficient fault by one spouse to warrant freeing the innocent spouse from the bonds of matrimony. The following were the most common traditional grounds for divorce:
Adultery
Cruelty (either physical or emotional)
Desertion
In some states, the “guilty” spouse was forbidden to marry again—at least in the state that granted the divorce. At the very least, the alleged spousal wrongdoing was revealed in a public proceeding that could easily become a media circus if the parties were well known.
It was never easy to prove fault if the accused spouse decided to contest the divorce or defend him- or herself. However, in most fault-based cases, the allegedly guilty spouse often helped to provide evidence of fault, which was fabricated to facilitate the divorce. Sham fault was the easiest way out when two spouses no longer wanted to live together.
This was one of the realities that prompted most state legislatures to adopt no-fault divorce procedures. No-fault divorce is a generic name given to any marriage dissolution process that allows the court to grant a divorce because the parties no longer want to be married and there’s general incompatibility or irreconcilable differences between the spouses.
Neither spouse is required to prove that the other spouse did something wrong. Some states require little more than mutual legal filings from both spouses agreeing that their marriage has failed and is beyond repair; other states require that the spouses live apart for a statutory period of time—typically from six months to two years. In a few states, living apart is, by itself, a sufficient legal reason (possibly the only legal reason) to justify a no-fault divorce. The period of separation required by law is often less if both spouses agree to the divorce.
If only one party wants a no-fault divorce and leaves the marital residence, there’s little the other spouse can do to stop an eventual divorce—although he or she can slow the process down by invoking the full period of separation.
Note that while a no-fault divorce simplifies the process of granting the decree that dissolves the marriage, it doesn’t magically distribute marital property, award spousal support, or determine child custody and support. These things often require a hearing or trial to resolve.
COVENANT MARRIAGE
Why Fault-Based Divorce Survives
Some states have retained fault-based grounds for divorce, although few divorcing couples choose this option. It’s almost always more expensive, invariably generates more ill will, and usually offers no advantages to an “innocent” spouse. There are two exceptions: The first is divorce in a state that has a long period of separation (although living apart is often simpler and cheaper than proving fault). The second exception is when an innocent spouse wants the judge to take the other spouse’s bad behavior into account when determining child custody, property distribution, or alimony. In some, but not all, no-fault states, excluding fault from the divorce also excludes considerations of fault when dividing property and debt, evaluating child custody, and determining spousal support.
Eddie and Teddy live apart for a full year. The next day, they can take the first steps to dissolve their marriage with an uncontested no-fault divorce.
Divorce proceedings begin when one spouse files a petition for dissolution of marriage (still called a complaint in some states) with the division of the state court that handles divorces. This may be the trial court of general jurisdiction (see Chapter 1) or a special domestic relations court or family court. In the State of Regret, Teddie’s lawyer filed the petition in family court. In legal-speak, Teddie is called the petitioner, while Eddie is known as the respondent.
The petition names both spouses, states when and where they were married, sets forth why the petitioner is entitled to a divorce (either fault grounds or no-fault grounds allowed by state law), and declares that the required separation period—if any—has been fulfilled. Teddie’s lawyer also attached a copy of a marital settlement agreement that details the arrangements the couple worked out to divide their property, bank accounts, debt, and tax liabilities—and the solution they propose for separate maintenance (alimony).
Although most states don’t require filing an agreement as part of the petition for dissolution, a well-crafted agreement that covers all the bases (it’s even possible to propose child custody and support) will probably be approved by the judge—and applauded as a time and work saver for the court. Like a prenuptial agreement (see Chapter 5), a marital settlement agreement is best negotiated and written with the help of independent attorneys.
A few states require divorcing spouses who have unresolved disputes to participate in one (sometimes more) mediation sessions. This is a last-ditch effort to get the parties to make decisions between themselves before the court is forced to intervene.
UNCONTESTED VS. CONTESTED DIVORCES
Once the petition is filed, the clerk of court takes over and serves Eddie with divorce papers—a summons or citation that informs him that he is now within the jurisdiction of the court for the possible dissolution of his marriage along with a copy of Teddie’s petition. Service of Process is a formal personal delivery procedure (performed in the State of Regret by a sheriff’s deputy, and in other states by a lawfirm employee, a licensed process server, or even by certified/registered mail).
This procedure is designed to ensure that the respondent is notified of the petitioner’s request to dissolve the marriage and that the court is moving ahead.
However, Eddie does not intend to contest the divorce and is fully aware of Teddie’s intentions, so he waives service to save the cost of formal service of process. Instead, Teddie’s lawyer hands Eddie a copy of the summons and the petition.
The ball is now in Eddie’s court. He has a statutory period of time—often thirty days—to respond to the petition. Eddie’s reply—filed through his lawyer—is an Affidavit of Consent. This acknowledges that he has read and understands the complaint, that he agrees with the declarations that Teddie made about their marriage, and that he consents to the divorce.
Although not a problem for Eddie and Teddie, the interval between filing the petition and the entering of the decree of dissolution leaves critical issues up in the air for many divorcing couples. For example: Who has to move out of the marital residence? Who has custody of the minor children? Who can access which bank accounts? Does one spouse need to keep paying for the other’s health insurance? Who drives which car? How will a nonworking spouse pay routine living expenses? Who pays for car maintenance? And the monthly mortgage?
And for the kids’ orthodontic care? Or for visits to the vet for the family dog?
These questions will be answered in the marital settlement agreement that will be approved by the court and incorporated into the divorce decree—but that day of certainty can be months or years away if a judge has to resolve spousal disputes.
MARITAL AND SEPARATE PROPERTY
IN THE INTERIM
Certain aspects of the before-divorce status quo may be preserved by standing orders in some states that spring into effect when a divorce petition is filed. These typically prevent either spouse from taking minor children out of the state, selling marital property, borrowing against land, cars, or other items that can be used as collateral for loans, and canceling insurance policies that benefit the other spouse.
In the interim, the court can also issue temporary orders that require each spouse to take certain actions, or refrain from taking certain actions. It’s common for one spouse to ask for alimony pendente lite—spousal support for the duration of the pending litigation. Temporary orders often cover such things as child custody, visitation, and support; payment of specific obligations and debts; payment of attorneys; the possession of different real properties (for example, the primary residence and vacation homes), the use of major items of personal property (such as cars), and the continuing payment of premiums for health and life insurance policies. The court can also prevent one or the other spouse from withdrawing savings from joint bank accounts.
If necessary and appropriate, the court can also issue a temporary restraining order that keeps a possibly aggressive spouse from harassing the other.
Temporary orders are legally binding—and taken seriously by courts. A party who blatantly ignores an interim order will be found in contempt of court. Judges punish contempt with fines and sometimes jail terms.
Because Eddie and Teddie mutually consented to the dissolution of their marriage—and worked out a marital settlement agreement satisfactory to both parties—their divorce will move ahead more or less “on autopilot.” The State of Regret requires a brief hearing before the judge who will issue the decree of dissolution.
Only the petitioner has to attend, although it’s not uncommon for both spouses to be there. Some states have eliminated the requirement for a formal hearing; courts simply notify the parties when the decree of dissolution has been entered.
When you read about divorce in older books, you’ll come across the term interlocutory decree. This was an initial divorce decree that would become final after a period of time. The idea was to give the parties an opportunity to reconcile before a divorce became absolute. Although this two-step process has been abolished, many states have a statutory waiting period—a second delay that is unrelated to the living-apart period necessary to file for a no-fault divorce.
The second clock begins ticking when the petition is filed (or sometimes when the respondent is served). It counts down the minimum number of days between the initiation of divorce proceedings and the date a divorce may be granted. (The State of Regret mandates 60 days; the periods in other states vary from 20 days to 180 days.) The goal of this cooling-off period is to allow the petitioner to rethink divorce and perhaps cancel the proceedings; in fact, few divorcing spouses use the waiting period to reconcile.
Coming to the end of the statutory waiting period doesn’t guarantee that the court will immediately grant an absolute divorce. The family court’s workload can add an unpredictable delay—though usually not a long one.
A WAIT TO REMARRY
All timing bets are off, however, if a divorcing couple can’t reach a marital settlement agreement and relies on the court to resolve major property, financial, and child custody disputes. The judge—sitting without a jury—will hear both sides of the case (including any witnesses the parties offer) and then reach a decision that encompasses all open issues.
A true adversarial divorce can easily add a year or two to the proceedings—much of the time consumed in gathering information and preparing for a trial on the issues. Some spouses in adversarial divorces have been known to intentionally cause even more delay by impeding information collection, postponing hearings, and refusing to attend required mediation or parenting classes (required by some states if the couple has minor children). Although a judge can compel compliance, going through the sanction process may pile additional months onto the divorce proceedings.
Moreover, the divorce clock doesn’t necessarily stop ticking when the trial judge enters a final decree. Either spouse can file a motion for relief from the final judgment—essentially asking the judge to reconsider the decision.
If the motions are denied, the unhappy party can appeal to the state’s appellate court. This succeeds fewer than 10 percent of the time with divorce judgments.
Appellate courts don’t try to evaluate the evidence presented by the spouses; they are chiefly concerned with whether the trial judge applied the state’s divorce laws and property distribution scheme (see Chapter 5) correctly. Moreover, the appellate court won’t change a marital settlement agreement that the trial court approves. The only way to change its terms is to file a motion to modify the divorce decree with the trial court (see below).
For most divorcing couples, adding a year of courtroom angst is a huge waste of time and money. As a rule, only about 10 percent of all divorce cases actually make it to trial. Because judges push hard to encourage battling spouses to settle their own disputes, it makes sense for both parties to forge an agreement as soon as possible. Why delay the almost inevitable?
Marital Property and Spousal Support
Lester and Hester also live in the State of Regret. He is forty-three, she is thirty-eight. They’ve been married fifteen years. Lester and Hester have two children Nestor, eleven, and Esther, nine. They own a mortgaged four-bedroom house on Sylvester Street and a three-year-old Golden Retriever named Jester.
Hester earns a good salary as the manager of the local “big-box” store; Lester is a stay-at-home dad. They have a joint checking account, a joint savings account, and six credit cards (all with substantial balances). Hester has a vested pension and 401(k) retirement plan.
The couple owns (more accurately, they and the credit union own) a Volvo sedan and a Chrysler minivan. They are also the landlords of a mortgaged rental property (a condominium apartment) on Fester Lane.
Hester and Lester have just decided to get a divorce. The couple also decided that Hester will file the petition for dissolution.
The Challenge of Dividing Marital Property
When Lester and Hester’s case reaches family court, one of the judge’s primary responsibilities will be to ensure that each receives an appropriate share of their marital property. (The judge will also need to address the custody, visitation, and support of Nestor and Esther, but I’ll wait until Chapter 7 to consider the couple’s children.)
If Lester and Hester can’t reach a marital settlement agreement (see above) between themselves, the judge will make an appropriate distribution of their marital property—including Jester. I chose the word appropriate with care. Most people are aware that two different schemes for marital property division are used in the United States:
1. Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin are community property states (in Alaska, a married couple can agree to have their property treated as community property). These states follow the simple approach of giving each spouse an equal share of the marital property—a straightforward 50-50 split.
2. The other states (including the State of Regret) apply equitable property distribution. Equitable distribution often begins with the equal division of marital property, but then the judge adjusts the final balance after taking the totality of the spouses’ circumstances into account.
Over the years, both methods have proved effective at dividing marital property. Before I explain the two schemes in detail, let me answer an obvious question.
What Is Marital Property?
Simply put, marital property is anything that belongs to both husband and wife. Now before you say “Duh!” let me add that although the concept is simple, judges often have to struggle mightily to figure out whether a particular item is marital property or whether it should be treated as separate property (nonmarital property).
Marital property generally consists of everything earned, acquired, or accumulated during a marriage—no matter which spouse did the earning.
The wages earned by either spouse during the marriage are marital property—even if only one spouse had an income.
A house bought during the marriage is marital property—even if only one spouse’s name is on the deed.
Savings accumulated during the marriage are marital property—even if the account is only in one spouse’s name.
The stamps acquired for a stamp collection during the marriage are marital property—even if only one spouse is a philatelist.
Employment-related assets accumulated during the marriage are marital property, including a pension, the growth of a 401(k) investment plan during the marriage, stock options, unused vacation time—and even frequent flyer miles.
What Is Separate Property?
Separate property belongs to a single spouse and will not be divided during a divorce:
Property owned by a spouse before the marriage is separate property—if it was kept separate (not commingled, see below) during the marriage.
Gifts and inheritances a spouse received during the marriage is separate property—if they are not commingled during the marriage.
Damages awarded to one spouse following a personal injury suit are treated as separate property—again unless they have been commingled during the marriage.
Property defined as belonging to one spouse in a valid prenuptial or postnuptial agreement (see Chapter 5).
As you can imagine, the realities of married life make it difficult to determine where separate property ends and marital property begins. To illustrate a common source of property-division friction, imagine that Lester used his separate property (savings he accumulated long before marriage) to make the down payment on the four-bedroom house that he now owns jointly with Hester.
In many situations like this, a divorce judge can identify the equity in the house that is attributed to the down payment and can also apportion some of the appreciation of the house of value to the down payment. If so, it’s easy to calculate the separate property that still belongs to Lester.
But, what if Lester and Hester took a large home-equity loan a few years after they were married and used the money to buy a boat? Even if they subsequently repaid the loan, and restored the home’s equity, it’s no longer possible to identify Lester’s original down payment.
This is called commingling. Separate property was combined with marital property in a way that makes it impossible to identify one from another.
Another example of commingling: Hester inherits a tidy sum from her great aunt’s estate and deposits the money into the joint checking account that receives her paychecks and which she and Lester use to pay routine bills. After a few years of money coming and going, not even Solomon could sort out “her money” from “their money.”
In some divorces, spouses fighting over what is and isn’t separate property have to hire accountants to track the history of disputed property. This is because most states require the spouse who claims that a specific piece of property is separate to provide clear and convincing evidence that the asset should not be treated as marital property.
Is Lester’s stamp collection separate property? Some stamps are, but some aren’t. The stamps he owned before he married Hester are separate property; so is any increase in their value during the years that he and Hester were wed. However, the stamps he added to the collection while they were married are marital property.
And what about Lester’s old savings account? Again the answer is, it depends!
If he maintained it as an individual account in his name, the money deposited in it before the wedding is separate property, although deposits made since the wedding—along with the interest accumulated during their years of marriage—are marital property.
But, if Lester transformed the account into a joint savings account after the wedding, everything in it will be considered marital property.
Many of the most difficult issues about separate vs. marital property arise when one of the spouses began a small business before the marriage. If either of the spouses subsequently made an economic contribution to the business, the resulting increase in value is marital property. However, if neither of the spouses made such a contribution, the small business remains separate property—along with the passive increase in value.
To illustrate the complexities, let’s assume that Lester had bought the rental condo as an investment before his marriage to Hester. After the wedding, however, Hester took over the chores of managing the property and finding new tenants. She also worked with Lester to refurbish and repaint the interior. Moreover, the couple used all of the profits to pay down some of the mortgage on the property. And, both enjoyed the benefits of tax deductions related to the property when they filed a joint income tax return.
You get the point! The divorce judge will have a hard time deciding how much of the current value of the condo—if any—remains Lester’s separate property.
Let’s have one last example. Imagine that Hester received an award of damages following an automobile accident and that she deposited the money in an individual savings account (solely in her name). The portion of the award that made good her pain and suffering is separate property. But, the compensation she received for lost wages and medical expenses will probably be considered marital property.
Community Property Distribution
In a community property state, marital property is divided equally between divorcing spouses—unless the spouses have worked out another arrangement in a prenuptial agreement, postnuptial agreement, or marital settlement agreement. The court doesn’t consider such factors as a poorer spouse’s financial needs and his or her ability to earn income when dividing marital property during a divorce. (Of course, the judge does consider these things when making decisions about spousal support.)
THE INFLUENCE OF CIVIL LAW
“We each get half” or “we each pay half” is the way that people instinctively resolve everyday property disputes. Many divorcing couples who don’t live in community property states automatically choose to follow a 50-50 approach when they negotiate their own marital settlement agreements. And many judges in “equitable distribution states” use equal division of marital assets as the starting point of a fair and just distribution.
In most real-world property distributions, it’s neither practical nor possible to demand the strictly equal division of every marital asset, because this would require the sale of many assets and the subsequent division of the proceeds. A judge will be reluctant to order the sale of a family home when one of the spouses and the couple’s children are living in it. And selling the couple’s cars is likely to disrupt both spouses’ lives. The same holds true for most of the family-owned items in daily use. Moreover, the forced sales of used personal property will almost certainly yield significantly less money than the replacement costs.
Consequently, community property state judges shape marital property distributions that give each of the divorcing spouses the same total dollar value. This works if the various items of marital property (other than money) are accurately valued. And therein lies two potential sources of considerable conflict: Who values marital properties, and how are values estimated? A popular solution is for each party to hire a divorce property appraiser. The spouses typically agree to use the average of the values provided by the two appraisers as the presumed value for each item of significant value.
Of course there’s nothing to stop two spouses from establishing their own valuations as part of a marital settlement agreement—and this almost is a practical necessity when dividing the small items of marital property. Another useful technique is alimony in lieu of property division (a kind of alimony which has nothing to do with spousal support). One spouse pays monthly payments for an agreed-upon period of time to the other spouse in lieu of his or her 50 percent share of a marital asset. This is often done when dividing family businesses, but it can be used when any marital asset is difficult to split, or when a forced sale to recover the equity is otherwise impractical.
Equitable Property Distribution
Equitable means fair and just—but don’t think of the name as a dig at the community property approach. Equitable distribution replaced old-fashioned property distribution schemes that traditionally gave marital property to the spouse who paid for it—the spouse who earned the money (most often the husband)—without adequate recognition of the stay-at-home wife’s non-monetary contributions to marital property, or that the spouses might face significantly different economic conditions after the divorce.
Many courts, as I said, begin the equitable distribution process by presuming that marital property belongs equally to both spouses. Then, the judge shifts the balance one way or the other in response to a long list of considerations:
The age and health of the respective spouses
How long they have been married
The employability and future earning capacity of both spouses
Their relative contributions to the accumulation of marital property
The spouses’ individual and joint debts
Whether one of the spouses has significant obligations arising from a previous marriage (for example, child support and/or alimony)
Whether one spouse will receive child custody and child-support payments
The value of each party’s separate property
Whether one spouse “dissipated” marital property during the marriage
The pension and retirement rights of each spouse
The tax consequences of the property allocations after the divorce
Sometimes, whether one spouse’s bad behavior caused the divorce
It’s actually impossible to come up with a full list of equitable distribution considerations, because in most states, judges have enormous discretion and can consider almost any factor that circumstances require in the search for a fair and just division.
In many cases, equitable turns out to be a 50-50 split of marital property—especially for a childless couple, both of whom have good jobs and good long-term economic prospects.
During the seventeenth century, one English law judge complained that “equity varies with the length of the Chancellor’s foot.” In other words, there’s no predictability to equitable decisions—the parties can’t be sure in advance what solution a particular dispenser of equity will see as fair and just.
The same complaint can be made of many equitable property distributions in modern family courts. There’s no telling how a judge will divide marital property—and it’s almost impossible for an unhappy spouse to successfully appeal the court’s distribution after the fact. This fact of judicial life is one more reason why it makes good sense for divorcing couples to resolve property-division disputes on their own.
Because there’s no “formula” the family court judge will apply to Lester and Hester’s situation, we can’t do more than come up with guesstimates of what a judge might do with some of their marital property, assuming (as we’ll “determine” in Chapter 7) that Lester will receive custody of Nestor and Esther:
Rather than give Lester the family residence outright (or require a sale so that the equity can be divided), the judge might order that Lester will have use and occupation of the house until Esther is eighteen. In the meantime, both Lester and Hester will continue to jointly own the house, but she will be responsible for making mortgage payments. When Esther is no longer a minor, the pair can sell the house and split the equity—say 40 percent to Lester, 60 percent to Hester. (This solution is practical in this case because Hester has a substantial income and neither party needs a share of the equity for routine expenses. Note that some states do not permit a use and occupancy award that lasts longer than three years.)
The judge might award the small balance in the checking account and 70 percent of the savings account to Lester, in recognition of Hester’s higher future earnings capacity.
And, the judge might issue a Qualified Domestic Relations Order (see below) that transfers a portion of Hester’s vested pension and 401(k) retirement plan.
Finally, the judge might transfer ownership of the Volvo sedan to Hester and the Chrysler minivan to Lester—and build the car payments to the credit union into the temporary alimony payments that Lester seeks (described below).
The Confusing World of QDROs
A Qualified Domestic Relations Order (QDRO—commonly pronounced cue-dro or quad-roe) is a legal document that transfers an interest in a qualified retirement plan (401(k) or pension plan) to an alternate payee—the spouse, former spouse, child, or other dependent of the plan participant.
The family court will issue a QDRO to divide a pension or 401(k) as part of a divorce decree or court-approved property settlement.
Broadly speaking, federal law prevents the assignment to other parties of the benefits owed to a pension plan participant. One important exception is an assignment made by a domestic relations order related to “child support, alimony payments, or marital property rights of an alternate payee.” Because there are specific legal requirements for a Qualified Domestic Relations Order, they are best left to experienced attorneys.
In our age of “plastic finance,” appropriate division of debt during a divorce can be just as important—and challenging—as the division of property. Most states divide debt the same way they distribute property. Marital debt (debt that benefited both spouses) is
divided equally in community property states;
apportioned equitably in equitable distribution states.
It’s often more practical to assign an entire debt to one of the spouses (so that he or she can keep making payments). In that event, the spouse taking on the full debt will be given additional property as compensation.
Nonmarital debt (typically a debt that one spouse incurred before marriage) usually remains the responsibility of the debtor. A common exception in some states is a student loan. Although one party borrowed the money years earlier, both spouses subsequently benefited from the income made possible by his or her education. Consequently, it’s reasonable to treat the loan as marital debt.
Complete Financial Disclosure Is a Must
It’s a simple truism that no property distribution scheme can work if one or the other spouse tries to hide assets. The law in all states—community property and equitable distribution—requires both parties to the divorce to make a full and complete financial disclosure to each other to facilitate the court’s property division.
If necessary, a judge will compel full disclosure—but the party who forces a judge to take action has made a serious mistake. In most states, a judge can make “reasonable inferences” against the spouse who fails to disclose—don’t be surprised if the judge reaches conclusions that strongly favor the other spouse.
It goes by several names—separate maintenance, spousal support, and the familiar standby, alimony—but most adults understand the idea: The divorcing spouse with more resources (and better economic prospects) pays a sum certain (usually on a monthly basis) to the other spouse. A court may order separate maintenance in addition to child support (see Chapter 7).
Alimony is not punitive. Different courts explain the purpose of alimony in different ways. These are most common reasons given:
To prevent the less affluent spouse from requiring public assistance (welfare)
To maintain, as much as possible, the standards of living that both spouses enjoyed while they were married
To correct a significant economic imbalance in the earning capacities of the divorced spouses
To give an economically dependent spouse the opportunity to become economically self-sufficient
All of these purposes flow from the universally applied principle that spouses have a responsibility to support each other financially.
Before a court awards alimony, it is supposed to carefully consider one party’s financial needs and the other party’s ability to pay—although many former spouses paying alimony believe that the judge truly ignored both before awarding separate maintenance. Because of this widespread belief, divorcing clients often arrive at their attorneys’ desks fearful of alimony—and ready to fight.
Most calm down a bit when the attorney explains that even permanent alimony can be changed after an award, and that court-ordered alimony is usually tax-deductible for the party paying it—making the bottom-line cost of spousal support less than it first seems. In any case, divorce courts will award alimony when necessary to achieve the purposes listed above.
There are four kinds of spousal support:
1. Alimony pendente lite—This supports a spouse during the divorce proceedings (also called temporary alimony).
2. Rehabilitative alimony—This type is awarded for a relatively short period of time (typically three to four years maximum) so that the recipient spouse can get back on his or her feet financially.
3. Permanent alimony—This type of spousal support is paid for an indefinite period of time (as long as the recipient spouse requires it).
4. Reimbursement alimony—This kind is awarded by some states to compensate one spouse for the economic sacrifices he or she made during the marriage to raise the other spouse’s earning capacity. In most cases, this means that one spouse supported the other during college, graduate school, law school, or medical school. The court will tailor a reimbursement alimony formula—possibly fixed payments for several years—to repay the working spouse’s “investment” in the other spouse.
The Case of Hester and Lester
In our hypothetical example, Lester requests the first three forms of alimony:
1. He asks for temporary alimony during divorce proceedings—enough money to pay usual household expenses.
2. He asks for relatively high rehabilitative alimony for a period of two years so that he can take refresher courses necessary to renew his teaching credentials, so that he can apply for a teaching job.
3. He asks for smaller permanent alimony after that because he doubts that he’ll ever be able to earn as much as Hester.
We’ll assume that Hester and Lester couldn’t agree between themselves about separate maintenance. So the divorce judge will award—or not award spousal support—based on several considerations:
The length of their marriage
The estimated length of time between the filing of the petition and the entering of a final divorce decree
Hester’s and Lester’s ages
Their education
The contributions each made to the well-being of the family
The standard of living that both became accustomed to while married
Their current salaries
Income, if any, from separately owned property
Their employability—and their comparative abilities to be self-supporting
Their health
The long-term disparity between their future financial prospects (in some states, if one spouse will have three or four times the income of the other, the difference is seen to warrant spousal support)
The fact that Lester stayed out of the workplace to care for the couple’s children
Hester’s and Lester’s respective fault in causing the marriage to fail
The likelihood that one of the other will be ordered to pay child support
Although some courts try to ensure that both spouses are able to maintain their standard of living after the final divorce decree, this is usually possible only when one spouse is wealthy. Most divorces lower both parties’ standards of living—typically for several years, potentially even longer.
While it’s impossible to foresee what family court in the State of Regret will do, I suspect that the judge will award Lester temporary alimony and rehabilitative alimony. The judge may also award a modest amount of permanent alimony—confident that Hester will ask for a modification (see below) once Lester is established in a good paying job.
In years past, the spouse who paid spousal support was almost always the husband. That has changed. Today, courts look at the financial resources of both spouses. Consequently, many more women pay alimony, and male recipients don’t feel the “recipient stigma” that once existed.
The End of the Obligation
An obligation to pay permanent alimony typically ends when
the paying spouse retires;
the receiving spouse enjoys a significant increase in his or her income;
the receiving spouse remarries or begins to live with another person in a marriage-like relationship.
In many states, the death of the paying spouse ends spousal support; in other states, alimony becomes an obligation of the paying spouse’s estate. Many divorce settlements call for the paying spouse to also pay for a life insurance policy on his or her life—a policy typically owned by the receiving spouse, who is also the beneficiary.
Courts use their contempt powers to enforce the payment of spousal support. A spouse who fails to bring delinquent alimony up to date can be fined or even jailed. All states have passed some form of the Uniform Reciprocal Enforcement of Support Act, which makes it relatively easy to enforce support orders if the paying spouse moves to another state.
A Property Settlement in Lieu of Alimony
I described alimony in lieu of property division above. It’s also possible to have a property settlement in lieu of alimony. For example, Lester might be awarded the entire income of the rental property—and full ownership—as a fraction of the spousal support provided by Hester. Most courts will also approve agreements wherein the parties agree to a lump-sum alimony settlement rather than periodic payments.
Modifying Property Division and Separate Maintenance
Times change—and so do former spouses’ financial circumstances and ability to pay alimony. If Lester finds that he needs more support or Hester’s bright financial picture darkens, either party can request the family court to change the spousal support order. (Child custody, visitation, and support orders can also be modified, when necessary—see Chapter 7.) In theory, divorced spouses can also request a change to the way marital property was divided. In practice, courts rarely modify property distribution decrees—and almost never redo the distribution established by both parties in a marital settlement agreement. By contrast, courts often reexamine separate maintenance.
The first step is for Hester or Lester to file a motion to modify the divorce decree. Either party can ask for a permanent modification (perhaps Lester’s developed a chronic medical condition that makes it impossible for him to take a full-time job) or a temporary modification (maybe Hester was laid off and is searching for a new job).
In the event of changed circumstances, the parties can agree between themselves to modify spousal support. At this point, they must file a motion to modify that includes a stipulation of the revised agreement. The court can then modify the original decree to reflect the new agreement.
There’s a common misconception that a revised support agreement becomes enforceable if the two former spouses sign it in front of a notary. In fact, a judge must incorporate the changes into a modified decree. This requires a trip back to family court via a motion to modify.
Another point worth mentioning: Courts have the power to modify spousal support if the recipient spouse discovers after the fact that the wealthier spouse didn’t fully disclose his or her financial circumstances during the divorce. As with other requested changes, the adjudication process begins when the unhappy spouse files a motion to modify.