Property Division
What’s the difference between marital and non-marital property?
From Daniel’s interview on ReelLawyers.com
-
In a divorce in the aspect the category
of division of property the very first
step is to determine what is marital
property and what is separate property
to paint with a broad brush there are
essentially three kinds of separate
property any property you owned prior to
the marriage if you have kept it
separate any property you’ve inherited
during the marriage if you’ve kept it
separate
and any gifts that you have received
during the marriage if you’ve kept them
separate once you call out what you
think is the separate property owned by
each spouse whatever is left is your
marital estate and that is what is
subject to division in a divorce process
separate property is not subject to
division now if you notice all three of
those categories had the caveat if
you’ve kept it separate you can turn
separate property into marital property
essentially by two processes either by
commingling it with marital property or
treating it in such a way that it has
gradually been transmuted from separate
property into marital property if you
had $50,000 in a savings account when
you got married but during the course of
the marriage you have put it into a
joint savings account uh with your
spouse and there’s now $100,000 in that
bank account it’s commingled it has lost
its identity of separate property
because if you took hundreds and
hundreds of dollar bills and put them
out on a table you couldn’t tell which
$100 bill was the one you owned prior to
the marriage which one you earned during
the marriage that kind of thing
How is marital property divided in a divorce?
From Daniel’s Interview on ReelLawyers.com
-
Tennessee is not a
5050 uh state which would some people
call a community property State
Tennessee is based on what is Equitable
under the circumstances of the case as I
said earlier there are a lot of
variables in each of these
categories Tennessee does start
out from the standpoint I have found
that virtually all our judges do this
they start out looking at both parties
and again as if we’re in court uh the
judge’s attitude is usually okay I
believe that a 5050 division would be an
equitable Division and Tennessee is an
equitable division state if one party
thinks they should get more than 5050
the burden is on them to convince the
court that more than 5050 is Equitable
now I’ll give you some examples let’s
say you have a long marriage let’s just
say that uh one spouse is a CEO of a
very successful company and has a very
nice six or seven figure income is in
good health the other spouse uh does not
have good employment skills maybe has
been in the home for a number of years
perhaps has a a debilitating illness
like rheumatoid arthritis I’ve seen that
before that spouse is not going to go
out and make the same kind of money as
the successful healthy
spouse so perhaps a bigger share of the
marital estate is called for and would
be Equitable and that is that happens
quite a bit you can see divisions that
may be 55 45 you can even see 6040 once
you get past 6040 you’re kind of pushing
the envelope but but it’s possible
How does the division of complex assets impact taxes in a divorce?
From Anne’s interview on ReelLawyers.com
-
When I’m helping a client divide a
complex estate and by that I mean a
state with lots of assets or an estate
with lots of different types of assets
you have to take into account the tax
implications on the different assets one
of the simplest examples I can give is a
401k or IRA when a person is going to
start taking withdrawals from a 401 K or
IRA they are going to be taxed on those
withdrawals Okay Age 72 whenever they
start drawing those out if a person owns
a home it’s different because it’s not
going to be taxed it’s a value in the
house so what you want to see when
you’re dividing things up you’re not
really dividing apples and oranges if
someone gets a $500,000 house and
someone gets a $500,000 401K the
$500,000 401K is going to eventually
realize taxes you know at the time when
the the money is being drawn out the
house is a different story so you’re not
really dividing the same type of
property those things have to be looked
at with each and every asset that a
client has and at the time that they’re
marital assets we put this all into a
balance sheet we uh try to distill down
what the liabilities are for each asset
and in the case of a retirement plan I
always add uh at least a 20% uh penalty
for taxes at the time that would be
withdrawn and that way we’re comparing
things a little more fairly so I think
it’s important when you are trying to
divide complex assets that you have an
attorney who understands what the
implications of those assets are over
time if you they’re awarded to you
How does divorce impact a closely held business?
From Anne’s interview on ReelLawyers.com
-
When you or your spouse owns let’s say
it’s a family-owned business or a
business with several other partners
that business has a value and it’s got
to get valued you may have already had
it valued recently or your spouse may
have been uh thinking about selling it
and has had somebody come in and make an
offer you can get value from different
areas and different information but
typically what’s going to happen to
happen is we hire a forensic accountant
who will come in and look at the pnls
look at all the accounts receivable look
at all aspects of the business sometimes
the forensic accountant has to be
specific to the type of business if it’s
construction or if it’s a restaurant
then they’ve got to be able to put a
value on that because we’re not going to
break up the business the business is
hopefully an income producing entity for
the marriage and for the post-marriage
situation of both the parties so the
business is going to stay as as one
entity but the value on that business
has to be split up between the parties
if that business has been started during
the marriage and continued to grow
during the marriage
What are the biggest challenges you face in high net-worth cases?
From Anne’s interview on ReelLawyers.com
-
The two biggest challenges I see in high
net worth divorce cases are one valuing
all the assets you’ve just got to have a
really good valuation of everything and
high net worth divorces tend to be
complex a lot of time there are trusts a
lot of time there are um closely held
businesses family businesses or a
business that’s been started during the
marriage that’s grown and grown and
grown and it’s got to be valued at some
point so valuation is very important the
other problem we tend to have in a high
Network divorce is is one spouse
determining what is their actual need
because if there’s a a higher earning
spouse and then perhaps a spouse who’s
who’s economically disadvantaged that
spouse tends to have had a lifestyle
funded by the higher earning spouse that
they don’t really know what do they need
what do they spend a month they aren’t
like regular people who you know know
how to pay the Kroger bill and the light
bill and the utilities and the mortgage
these are people who have two or three
homes maybe a plane and they’re used to
just hopping on first class they don’t
know what it costs them to live one
thing if somebody’s got a business
manager it’s very very helpful the
business managers tend to have a really
good handle on on what the actual
expenses are but coming up with
lifestyle expenses for the lower earning
spouse in a high- net worth divorce is
always a challenge