My Forbes.com Articles

Archive for April, 2011

It’s Critical to Understand How Debt is Divided in Divorce

posted by admin 10:00 AM
Wednesday, April 27, 2011

All joint debt acquired during the marriage will almost always be considered a joint obligation of both spouses. All debt that has both the husband and wife listed as co-signers such as car loans, mortgages, and credit card debt will also be the joint responsibility of both parties. However, if your husband has debt solely in his name, in most cases, your husband will be solely responsible for it and not you.

An exception to this is in Community Property states where both parties are typically responsible for any debt acquired during the marriage, even if that debt was incurred by just one of them. States with community property laws are Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska is an “opt-in” community property state, which means that both spouses must agree to be jointly responsible for all debt.

Once you are separated, any new debt incurred will be the sole responsibility of the person who incurred that debt. You need to keep careful records of your credit card charges after you are separated so that you can prove which are yours and which belongs to your husband. It is important to note that separation is not legally recognized in every state and those that do recognize it have their own guidelines for defining the date of separation, so please consult with your divorce attorney.

Joint debt, just like marital property should be negotiated and divided during the divorce process. Typically, the debt should follow the asset that is associated with that debt. So the car loan should become the responsibility of whomever gets the car and the credit card charge for the wide-screen television should become the responsibility of the person getting the TV, and so on.

It is important to remember that even though your divorce settlement agreement identifies who is responsible for each debt, your creditors don’t care about your divorce settlement agreement and will consider each spouse to be 100% responsible for any joint debt. So if your husband declares bankruptcy or defaults on any joint debt, those creditors will come after you for full payment, regardless of what your divorce agreement states.

To avoid this possible scenario, you may want to consider requiring that all debts be paid off prior to finalizing the divorce if there are sufficient assets to do so. To the extent possible, all loans, credit cards and other debts that were established jointly with your husband should be frozen and/or closed as soon as you know you are heading for divorce.

If you have debts that need to be addressed in any divorce settlement agreement, I highly recommend that you work with one of our Divorce Financial Strategists™ to help you resolve those issues and to protect your current and future credit rating.

All content on this site/blog is for informational purposes only, and does not constitute legal advice. 
If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are solely those
of the author, who is not an attorney.
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Are Divorced Parents Required to Pay for their Children’s College Education?

posted by admin 10:00 AM
Wednesday, April 13, 2011

Child support payments generally stop when children reach the “age of emancipation.” In most states, that age is between 18 and 21. But what obligations do parents have to pay for their children’s college education?

Whether divorced parents have a legal obligation to pay for their children’s education depends on the state in which the divorce occurred.

The following states have laws that allow courts to order the non-custodial parent to help pay for college (depending on the state, the cost of college may include, tuition, room and board, books, extracurricular activities and a monthly allowance); Alabama, Arizona, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Iowa, Maryland, Massachusetts, Michigan, Mississippi, Missouri, Montana, New Jersey, New York, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Washington and West Virginia.

Alaska, Nebraska and New Hampshire currently have laws on the books that prohibit the courts from ordering college support, except in those cases where the parents had a previous agreement.

Even in the states that don’t require paying for college expenses, courts recognize the need for children to have a college education. Therefore, they can allow the issue to be included in the divorce settlement agreement, including the amount and term of alimony to be paid.

The best way to deal with this during your divorce is to negotiate a written college support agreement in addition to any other child support agreements.

A college support agreement should include:

• What percentage of college expenses each parent is responsible for
• How many semesters of support will be provided
• Any limits on yearly payments
• Whether or not there is an age limit for the child to attend
• Any restrictions on which college the child should attend
• If there should be a minimum GPA
• Exactly what expenses will be covered

Alternatively, if there are many years remaining before the children start college, it might be preferable to negotiate a lump sum payment up front assuming there are sufficient assets available to do this. Since you never know what can happen over a long period of time – your ex-husband can die or go bankrupt – a bird in hand might be just the way to go.

However, ascertaining the future costs of college can be very difficult, especially if the children are still young. Unfortunately, most divorce attorneys don’t have the training or expertise to compute complex projections of future college costs and what the present value of those future costs would be in today’s dollars. That’s just one of many reasons why you should consult with one of our Divorce Financial Strategists™.


All content on this site/blog is for informational purposes only, and does not constitute legal advice.
If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions expressed are
solely those of the author, who is not an attorney.
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Divorce and Your Grandmother’s Diamond Ring

posted by admin 10:00 AM
Tuesday, April 5, 2011

During divorce there are so many things to divide with your husband that you may have forgotten all about the diamond ring your grandmother gave you many years ago. But when you finally get around to thinking about it, it hits you like a ton of bricks.

Can my husband take my grandmother’s diamond ring in our divorce?

Most likely he can’t. That’s because that diamond ring would be considered your separate property. It was a gift or inheritance given to only you by someone who is not your spouse. (For a more extensive discussion on the differences between separate and marital property, please see my Huffington Post article). The only way there might be an issue, is if you used marital funds to repair the ring, replace a missing diamond, or somehow increased the ring’s value. If marital funds were used to increase the value of the ring, it may still be considered your separate property, but the increase in value may be considered marital property. That increase in value would then be thrown into the pot with all of the other marital assets.

On the other hand, all gifts that your husband gave you after you were married (and that you gave him) for anniversaries, birthdays, etc., are considered marital property and they would also be part of that pot of assets that gets divided. I know that seems unfair, but that’s the law.

However, any gifts that you received from your husband before your marriage, including your engagement ring, would be considered, in most cases, your separate property, since you received them while you were still single.

The bottom line is that you should never commingle your separate property with marital property. Then, if you should later divorce, there would be no question about what is rightfully yours. Another way to decide what should be separate property and what should be marital property is through a prenuptial or postnuptial agreement. (For a more detailed discussion on this, please see my Huffington Post article.)

If you are getting divorced, or thinking about it, and have questions about how your family heirlooms and other assets might be affected, please contact us. One of our Divorce Financial Strategists™ will help you protect what is rightfully yours.

All content on this site/blog is for informational purposes only, and does not constitute legal
advice. If you require legal advice, retain a lawyer licensed in your jurisdiction. The opinions
expressed are solely those of the author, who is not an attorney.
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