Law Office of Joanne Kleiner

Archives for August 2019

Aug 24

How Debt Allocation Agreements Protect Spouses

Do You Need a Debt Allocation Agreement?

The average Pennsylvanian has about $40,000 in debt, which is lower than the national average but still significant. During divorce proceedings, spouses often find out about thousands of dollars in debt to which they did not agree but may still be on the hook for repaying. Many family lawyers recommend a debt allocation agreement within a prenuptial agreement in order to avoid this scenario.

Pennsylvania Is an Equitable Distribution State

Equitable distribution is a legal concept that governs how marital assets and debts will be divvied. Pennsylvania does recognize a distinction between separate and marital property. If an asset is deemed separate property, the other spouse has no inherent right to it. Examples may include property:

  • Acquired prior to being married
  • Obtained after the couple is separated
  • Explicitly excluded by a contract
  • Received as part of an inheritance

Marital property includes all assets and debts acquired during the marriage. These can include credit card balances, loans, mortgages and so forth. Equitable distribution means that the courts will distribute those items in an equitable manner — in other words, what a judge deems fair and reasonable.

What If Your Distribution Is Not So Equal?

Equitable distribution means fair but not necessarily equal. Unfortunately, a judge’s idea of what is fair may not be the same as yours. This is why prenups are so important in Pennsylvania regardless of what your financial status is at the time you enter the marriage. If your spouse spends thousands on Philadelphia Eagles or Pittsburgh Steelers season tickets without your consent, a judge is not necessarily going to view that outstanding expense in the same negative way you might.

Prenuptial Agreements

A prenup or premarital contract is a contract agreed upon by two partners before entering marriage. It can protect those individuals during the union and if it ends in divorce. These agreements are governed by general federal, state and local contract rules and must be in writing and signed by both partners. Prenups will usually cover any items found within a divorce order, such as:

  • Right to property
  • Distribution of assets and debts
  • Spousal support
  • Family business management
  • Insurance policy benefits

Debt Allocation Agreements

When many people consider prenups, they think of them in terms of assets. There is a stereotype about wealthy individuals using prenups to protect themselves from dishonorable partners entering marriages for all the wrong reasons. But prenups help you to protect your future no matter how wealthy you are. A debt allocation agreement is an aspect of a prenuptial agreement in which both parties are free of any debt that was not made jointly or lacks a signed document asserting the joint status. Many home-related loans require joint status, but if your spouse were to open up a credit line you did not know about and go on a huge spending spree, this agreement would protect you from those actions.

Is a Pennsylvania Court Required to Uphold a Prenup?

The Uniform Premarital Agreement Act was introduced to give individuals confidence that a prenup would be enforced while still allowing judges some leeway. Pennsylvania has not yet enacted or even introduced the act, so judges have much greater leeway. Still, courts will generally enforce prenups unless a spouse can prove the agreement was not entered into voluntarily, he or she had insufficient knowledge of the other spouse’s finances and behaviors during the marriage or the other spouse did not fully disclose assets and debts.

Protect Your Future

If you’re considering marriage or in the process of being married, we strongly recommend that you seek legal representation and take steps to protect your future. Many people have an impression that prenups are just for the rich, but this is not the case at all. At Joanne Kleiner & Associates, we focus on Pennsylvania family and divorce law and welcome the opportunity to consult with you on such matters. Set up your consultation with a family lawyer today by contacting us online or calling our Jenkintown office at 215-886-1266.

Aug 21

Ways to Protect Your Financial Future When Getting Divorced

Steps to Take to Protect Your Finances During a Divorce

Going through a divorce is an emotional process that leaves many people vulnerable to making mistakes and feeling defeated. When separating, it can be easy to forget about how your finances will be affected throughout the process. You’ll want to take a few important steps to protect your money and reduce the risk of loss while parting ways with your partner.

Close Joint Accounts

Any accounts that are shared between you and your former spouse need to be closed immediately. This will prevent you from becoming responsible for any debt that your partner accumulates after you decide to separate. Pay down all of your credit cards as much as possible and put the account in your name or your spouse’s name to avoid sharing responsibility. Attempt to negotiate splitting the debt with your spouse if there’s a remaining balance. If the balance is too high to repay in full, you’ll need to contact the lender and ask what is required to have your name completely removed from the account.

Avoid using the credit cards or account to acquire new debt, which the courts will require that you repay. The court will also require that any money you withdraw during this time will need to be repaid. Consider getting a post office box to ensure you receive all of your mail that contains your new banking information. This will prevent the information from being obtained by your spouse.

Requesting a copy of both your and your spouse’s credit report is also necessary. This will make you aware of any joint accounts and accounts that your spouse has open in his or her name. Your soon-to-be ex may have made foolish decisions with your money, which can affect your financial future. There also may be issues or errors present on the credit reports, which will need to be disputed.

Take Inventory of Your Assets

One of the most challenging parts of going through a divorce is having to divide up the assets and split it between both parties. In some cases where there’s a lot of tension, one of the spouses may attempt to hide some of the valuables or take them out of the home. Make it a point to take photos of everything that is shared between you and your spouse to have a thorough record of what needs to be split. Avoid selling any of the assets if you’re in need of cash as this can complicate the process of filing for divorce.

Making copies of bank transactions of large purchases that you’ve both made in the marriage can also allow you to have proof of what needs to be divided.

Alimony

Many people request alimony, which is taxable income. Attempt to work with your former spouse and legal counsel to agree on an amount of money that can be provided but won’t be listed as taxable alimony. Alimony laws are also constantly changing, so you will want a legal professional to help. You may also want to consider getting job training before going through a divorce to ensure you can become financially independent and are capable of supporting yourself.

Hire a Family Lawyer

One of the most important steps you can take after you’ve decided to file for divorce is to contact a Jenkintown family lawyer who can review the details of your case. Look for someone who offers free consultations and can determine what you’re entitled to receive, whether it’s custody or assets. Hiring a Jenkintown family lawyer can allow you to be represented by someone with a high level of legal knowledge in the industry. Legal counsel will know the right steps to take to increase your chances of obtaining more money.

If you are preparing to file for divorce, contact the Law Office of Joanne Kleiner & Associates today by calling 215-886-1266. You can obtain legal representation and learn more about your rights. Our Jenkintown family lawyer will help you understand the correct plan of action to take.