Law Office of Joanne Kleiner

division of marital assets

Feb 17

The Difference Between Equitable and Community Property Division

Equitable and Community Property Division Rules Are Not the Same

More than 700,000 Pennsylvania residents are divorced. This state operates under equitable property division guidelines in divorce proceedings. A spouse who assumes that he or she will automatically walk away with a 50/50 split of marital property is mistaken.

Property Division Rules Vary by State

Divorce laws vary by state. There are currently 41 states that operate under equitable property division guidelines and nine states that use community property rules. In every state, marital property and marital debt refer to assets or liabilities spouses have acquired or incurred during the marriage.

A family court judge overseeing property division proceedings will determine how marital property and marital debt should be split between spouses to settle a divorce. A divorce lawyer can help a concerned spouse protect his or her financial interests in court. Certain divorce-related topics can make property division more complex, such as if spouses have children together and must determine whether they will continue to live in the marital household and, if so, who will live with them as well as who will pay for maintenance and upkeep of the home.

How Equitable Property Division Differs From Community Property Rules

Business partners typically possess shared ownership interests in the assets of their company. If they dissolve their partnership, it is common to divide assets and liabilities between them. It is similar in divorce, meaning that neither spouse has an exclusive right or responsibility to any asset or debt accrued during the marriage. In states where community property division rules apply, all marital assets and debts are equally split, 50/50, between spouses in a divorce. In Pennsylvania and other equitable property states, the division of marital property must be fair but not necessarily equal.

A judge ruling on property division issues in an equitable property state determines how assets and debts should be split so that each spouse receives a fair portion of the overall value of the total assets and the amount of debt to be paid.

Establishing Separate Property Ownership

If spouses signed a prenuptial agreement before their wedding day, it is possible that certain assets or debt have legally been assigned separate ownership or liability to one spouse or the other. Certain issues, such as an inheritance that is designated for one spouse only, may also not be subject to property division in a divorce. Intended spouses can use a prenuptial contract to protect assets or avoid a liability, such as a future spouse’s college loan debt, in case a divorce takes place at some point; this is true whether the state in question has equitable or community property rules.

Equitable Property Rules Enable Asset Trading

In order for a Pennsylvania family court judge to determine a fair division of assets, spouses must fully disclose every asset or property they own. In some cases, it’s possible for spouses to agree to trade assets, meaning they agree to exchange the value of one asset for another. For instance, a car cannot be physically split in two; however, spouses might agree to exchange the value of a car for the value of another asset. Another example might be if a spouse wants to keep the marital home and is willing to exchange his or her value portion of a vacation property or other assets in order to do so. A divorce lawyer can make recommendations to a client regarding specific asset value issues.

Seek Clarification of State Laws Before Heading to Court

Divorce isn’t easy, but it’s often possible achieve a fair settlement and move on with life even if some issues are more complex and challenging to resolve than others. Regarding equitable property division versus community property division rules, it’s critical to understand the difference and to know which laws apply in a specific set of circumstances. If a person lacks knowledge about equitable division guidelines and heads to court assuming that he or she will automatically get an equal portion of assets in a divorce, discovering that this is not necessarily true may have a significant impact on his or her settlement and post-divorce financial status.

It’s always best to act alongside experienced legal representation in court because a family law attorney can protect a client’s rights and financial interests, especially during property division proceedings. If you’re concerned about property issues as you prepare for a Pennsylvania divorce, reach out to a Jenkintown divorce lawyer by calling (215) 886-1266.

Dec 19

Is It Worth It to Fight for the Family Home?

What to Do With the Family Home in a Divorce

Pennsylvania homes have appreciated by nearly 4% in the past year, creating some tough decisions for divorcing couples. Specifically, people are faced with the choice to fight for the family home or leave it. Generally, you have three options: try to fight to keep the home; let your ex-spouse stay, and be paid for your share; or sell the home, and divide the proceeds.

Will the Court Allow You to Stay?

The first thing to think about is whether the court will actually allow a person to stay in the home. Usually, a judge will want to ensure that there is as little upheaval as possible for the children. If they are accustomed to living in the home, the court will not want to make them move. That would not be in the best interests of the children. Accordingly, the parent who has physical custody of the children will have the best chance of keeping the family home.

Can You Afford It?

Moreover, both ex-spouses need to think very hard about whether they can afford the family home on their own after the divorce is final. There is a major difference between affording the mortgage on one income rather than two. It may still be a stretch even if you are receiving child support. The last thing that you would want is to become “house poor,” spending a majority of your income on housing with little to spare for anything else. These days, the ability to refinance your home at a lower interest rate could help with being able to afford the home.

When you are getting divorced, you are also balancing your short-term financial needs and your long-term plan. Things like retirement planning often take a short-term break while you get your financial feet under you after the divorce. However, you should factor in things like whether and when you will be able to retire. If keeping the home comes at the expense of your financial future, you should think hard about whether it is what you want.

Decisions About the Home Can Get Contentious

In addition, fighting to keep the family home would necessarily involve the word “fight.” This means that your divorce can end up in a hostile place. If you have children and need to co-parent, this could pose a long-term complication to a relationship that you need to preserve. While this is not to say that you should automatically surrender to what your ex-spouse wants in the name of harmony, you should recognize that it will come at a cost.

Finally, you need to weigh the factors of wanting to maintain continuity versus being better off with a fresh start. Some people may benefit from moving somewhere else, especially if staying in the same place will consume them with unpleasant memories. However, others may want to stay where they are because there would be too many changes for them to process.

In your particular case, you need to decide what is best for your specific situation. The one unchanging factor is that you need to be honest with yourself and realistic, both in terms of what you can afford and whether you can agree with your ex-spouse. You have multiple options that you need to consider while working together with your divorce attorney. Deciding to fight to keep the house can be stressful if that is your preferred course of action.

Although it may require some maneuvering, there is a way that both individuals can keep the home together, even after the divorce, in a collaborative manner. Before you decide on one course of action, consult with your divorce lawyer about the strength of your claim and whether there are any other possible solutions. Keeping or giving up the home may not necessarily be an either/or proposition.

To learn more about this and other issues affecting your legal case, contact a Jenkintown, PA, divorce lawyer at the Law Office of Joanne Kleiner at (215) 886-1266.

Nov 18

How the Pandemic Has Put a Strain on Household Finances

How to Manage Household Debts During the Pandemic

As of October 2020, the unemployment rate in the United States was 7.9%, and the unemployment rate had been as high as 14.4% in May 2020 when the pandemic was at its spring peak. Although eviction moratoriums and other protections have been put in place to help the unemployed, they can’t guarantee that you’ll enjoy financial security now or in the future.

What Happens If a Joint Debt Isn’t Paid as Agreed?

If your name is on an account that is more than 30 days past due, your credit score could fall by anywhere from 60 to 150 points. Furthermore, you may be subject to a barrage of phone calls, letters, or other attempts to collect the past due balance. This may be true even if your estranged or former partner is required to pay off a joint debt per the terms of a separation or divorce agreement.

Typically, your lender is only bound by the terms of the documents that were signed prior to receiving a loan. Ideally, a divorce decree will allow you to transfer debts that your spouse is required to pay to an account in that person’s name only.

In the event that a debt is secured by collateral, you risk losing that collateral unless an effort is made to get current on the loan. For instance, a lender could repossess a family car or foreclose on a family home if payments are not made in a timely manner.

Try to Avoid Using Retirement Funds to Repay Marital Debts

It may be tempting to use retirement savings to pay a joint credit card balance or make a mortgage payment. However, it is worth noting that money that sits inside of an IRA or 401(k) is typically exempt from being seized by creditors or by state or government tax authorities. It is also worth noting that your retirement accounts are generally seen as joint assets even if your name is the only one on them.

Therefore, making a withdrawal prior to filing for a divorce may be used against you during settlement talks or during a divorce trial. This may be true even if the money was used for what you perceived to be a legitimate purpose. A divorce lawyer may be able to provide more insight into what might happen to marital assets just before, during, and after a marriage ends.

Get in Touch With Your Lenders Immediately

In most cases, your lenders will work with you to make it easier to stay current on a loan during a period of economic distress. For example, you may be entitled to a student loan, car, or mortgage forbearance, which might make it possible to skip or postpone one or more monthly payments. If you have positive equity in a car, home, or other assets, it may be worth selling it and using the proceeds to buy food or take care of other necessities.

In some cases, alleviating your financial stress may alleviate issues in your marriage that might have put it on the brink of failure. For instance, getting mortgage forbearance may mean that you don’t have to move your child out of a quality school district or move from a home into a cramped apartment. It might also mean that your spouse doesn’t need to get a job outside of the house that could negatively impact his or her health.

However, if you feel as if your marriage is likely going to come to an end in the near future, it may be in your best interest to speak with a divorce lawyer. He or she might provide more insight into how joint assets and debts are typically divided in a divorce proceeding.

If you are in need of divorce legal services in Jenkintown, contact the Law Office of Joanne Kleiner today by calling 215-886-1266 or by sending a fax to 215-886-2670.

Nov 21, 2017

PA Divorce Tips: Should I Charge Rent to a Former Spouse?

Divorce Tips Lawyer | Jenkintown Divorce Lawyer

Trying to move out quickly and determine the best path forward for your family after deciding to get divorced is never easy. But what happens if a spouse whom you intend to divorce wants to stay in the family home at least for a certain period of time? The other party may be curious about whether or not they can charge rent to such a person and there are unique considerations that should all be evaluated by a divorce attorney in Pennsylvania if you have questions about this.

In certain situations, you may be eligible to charge rent to a person who intends to stay in the family home. The spouse that had to leave the home as the divorce proceeds may find themselves paying for the house even though they don’t live there anymore. This is why Pennsylvania courts have generally given credit for the fair rental value of marital property to the spouse that had to move against the spouse in possession during equitable distribution if the property is held jointly. The spouse in marital home must pay rent for the time he or she lives there exclusively.

Rental credits could be awarded is limited to the amount that the dispossessed person had a financial or personal interest in that same property. In one recent case, a wife that used premarital fund had to refinance her marital property to undermine the husband’s interest. A factor that determines credit applied to someone is the period of time that a spouse was out of the home and the time that the other spouse lived exclusively on the property.

Another critical factor of this determination is whether or not the party could rightfully be in the home. In some cases, one spouse has been banned from the home due to a court order and that person cannot receive credit for rent. This is based on circumstances and one that should be presented to your Pennsylvania divorce attorney early on in your case to learn more about how to protect yourself.

With many complex issues involved in the dissolution of the marriage, the particularly contentious one of division of property and who maintains the marital home can lead to further legal battles if you’re not careful. Thankfully hiring an experienced Pennsylvania divorce attorney can help you with the support you will need going forward as you deal with one of the most troubling and difficult times of your life.

A Jenkintown divorce attorney is an important asset to keep at your side for the duration of such a legal case because he or she can help you navigate obstacles and learn more about how to protect yourself and avoid common missteps. You need someone you can trust with such a confidential and emotional issue when determining to get a Pennsylvania divorce in Jenkintown or elsewhere in PA. Do not hesitate to hire a lawyer who is knowledgeable about the technical aspects of the law and one who makes you feel confident in the handling of your claim.

The most common reasons to consider this situation are that the other spouse has not had an opportunity to find housing yet and because you might want to make things seemingly more stable for the children rather than establishing separate households yet. While these are worthwhile issues to evaluate, make sure you see all aspects of keeping the spouse in the same house.

Another time when a rent situation may emerge is if the spouses own the house together and one moves out, but the other remains. Who pays the mortgage and picks up the bills can generate uncomfortable conversations if you don’t have a plan in mind.

CONTACT US

At the Law Office of Joanne E. Kleiner, we have more than 25 years of family law experience. We’ll help you stay focused on what matters. To schedule an appointment with an experienced Pennsylvania divorce attorney, contact our office online or call us at 215-886-1266.

Nov 12, 2017

Basics of Pennsylvania Divorce Property Division

 

Divorce Property Division Lawyer

Dividing the property an important consideration when a marriage ends. But before you or the courts decide how to divide the assets, you will need to determine the type and value any of the assets you acquired when you were married. Since property division will heavily influence your financial life after divorce, it’s worth talking things over with a lawyer and bringing a full list of your assets and liabilities that may be up for division.

Make sure that you understand your rights and responsibilities when doing so by hiring an experienced Pennsylvania divorce attorney to help walk you through the process and give you a better understanding of what is involved.

The first step you need to take involves the identification of property. You will need to create a list. Include everything because you can always remove items later. Your assets are tangible items including boats, homes, furniture, businesses, and collectibles. Furthermore, you might also wish to include intangible which include stock options, patents, bank accounts, retirement plans, copyrights, trusts and insurance policies.
You will need to then identify each the type of each asset. An asset will be classified as non-marital or marital.

The characterization of an asset plays a crucial role in diving and determining the value of the property in divorce. Marital assets in Pennsylvania include all assets acquired by either spouse during the marriage. Non-marital property includes assets either spouse had before the marriage, assets that are inherited or gifts, and those assets acquired after couple separated. The courts are authorized to distribute and divide marital property between the spouses in the divorce. Both spouses keep their separate property in the majority of cases.

The characterization of property is also impacted by when the couple separated. This is usually the date when the couple began to live separately. This means they do not present themselves as a couple. The spouses do not need to maintain separate households but it will be more challenging when settling the divorce case.

After you have identified the separation date, the next phase is to identify the dates that the assets were purchased. Property acquired before the marriage are considered separate property. If the spouse brought an item into the marriage, that item belongs to the spouse separately.

The next phase of this process is to identify what the assets are worth. This can be challenging as there are numerous different factors involved and you may wish to retain the services of a professional. Typically, courts will use the current assessment of the item at the time of the separation. The marital property could have another component that needs to be computed as it relates to comingled assets. You can deduct contributions from a separate party from current value and consider interest that could have accrued.
Divorcing couples will follow these steps to agree and decide how to split their property on their own but they might not be able to come to an agreement. This means it goes before a judge for consideration.
Courts in Pennsylvania consider numerous factors when deciding the division of the property, including each spouses’ needs, their vocational skills and job prospects, how long they were married, whether either spouse has been previously married, the spouse’s ability to obtain assets and earn income in the future, the standard of living enjoyed over the course of the marriage, and the amount and value of each spouse’s assets.
Courts do not consider marital misconduct in Pennsylvania but consulting with your experienced Pennsylvania divorce attorney can give you a better perspective on what is involved and how to best protect your interest