Equitable Distribution

Equitable Distribution – The Scoop on Joint Accounts

Published on: July 12, 2012 | On behalf of Arnold & Smith, PLLC

It happens all the time, people sign on the dotted line creating joint accounts. Credit cards, bank accounts, car leases, etc. Many of us do it without even thinking. What we may not understand is just how important that decision is to our financial future and how hard a decision it can be to unwind. The following are some important things to know before opening a joint account.

First, joint credit can mean many different things. The first kind of common account is a one that is truly split. This means that you are both partners on the account and fully liable for the loan. It’s important to realize that if your partner flakes out you are liable for 100% of the debt, not just 50%.

Another variety is an account where you are listed as an authorized user. In such accounts you are allowed to use the card but have little or no responsibility for ever repaying the debt. If the debtor defaults it is possible that some lenders will attempt to collect from you, especially for the purchases you made.

A final variety is a co-signer situation. In these cases you are signing on to be responsible for the entire amount of the debt even though the credit has been issued in another person’s name and you are not permitted to use it. If the borrower messes up, this bad behavior can be reflected on your credit history as you signed up to be on the hook.

Second, ending a relationship could potentially lower your credit score by reducing your income level. If your income drops and creditors pull back your credit limits there could be a real impact to your credit situation. One way to avoid this is to keep using some of your individual accounts while in a relationships.

Equitable Distribution Lawyer – Divorce and Its Impact on Retirement Accounts

Published on: May 31, 2012 | On behalf of Arnold & Smith, PLLC

As we’ve discussed on the blog before, divorce does not only affect the young. Instead, the trend of baby boomers splitting continues to increase with about one in every four divorces happening with people over the age of 50. Divorce at this age presents challenged not likely to be encountered by those in their 20s and 30s.

One such issue is what happens to retirement accounts, pension plans and Social Security benefits. For many couples, retirement accounts represent a considerable chunk of their net worth, and as such, they must be addressed in divorce settlement agreements. Unfortunately, dividing retirement accounts and pension plans is a complicated process that involves tax and other financial considerations. Some of the important things to know about the process are listed below:

• Retirement funds created during the marriage are typically viewed as marital property.

Contributions to 401(k) are made via deductions from salary, pension plan benefits are a function of years on the job and salary earned, and husband and wife, regardless of whose account it is, often count on the money from both. Retirement funds added during your marriage are typically treated as marital property. However, if a spouse enters the marriage with money already in his or her 401(k), those funds are generally considered separate property, and are not included in the division of assets. It is possible that the increase in value of the separate property could be considered marital property, but that’s not always the case.

• Any retirement assets that are marital property can be divided, but the process depends on a number of factors.

When dividing 401(k) or 403(b) plans, the court must follow federal guidelines. When IRAs are involved its state law that dictates the division process. It’s important that your settlement agreement clearly explain how assets will be divided and how the funds will be transferred.

Equitable Distribution of Marital Property

Published on: May 24, 2012 | On behalf of Arnold & Smith, PLLC

Family law judges in North Carolina apply the divorce concept of equitable distribution when it comes time to divide the property and debts between a divorcing couple. This means that the marital estate, assets and debts, are to be divided in an equitable manner.

This means that the division of property and debts between the divorcing parties should be fair, but not always equal. There is no fixed standard to divide property, each case will be decided on its own facts, and the court’s discretion will not be disturbed on appeal without a showing of clear abuse (a very tough standard to meet).

Property includes personal items (such as cars, furniture and household items) and real property (land and houses). Debts include mortgages, car loans, and credit card bills. Really anything you can possess is thrown into the pot before it’s all split apart.

It’s important to note that not all property is subject to this equitable division. Items that qualify as non-marital include the following: property acquired by either party before the marriage; property acquired after certain stages of the divorce process; property excluded by written contract of the parties (likely a prenuptial agreement); and any increase in value of non-marital property that did not result from efforts of the other spouse.

Judges consider multiple factors when deciding how to divide property between the parties and it’s sometimes hard to know which issues hold the most sway. Some of the considerations before the judge including the following:

• The financial contributions of each spouse to the marriage
• The age and health of the spouses
• The length of the marriage
• The existence of retirement benefits
• Any potential alimony awards
• The child custody arrangement

North Carolina Divorce Advice – How to Financially Prepare (According to Fox Business)

Published on: April 26, 2012 | On behalf of Arnold & Smith, PLLC

Divorce is a difficult process, emotionally and financially. Before you blindly step into the mess, there are steps you can take to empower yourself by getting your finances in order. Taking the following steps can help make things run more smoothly and even lower your eventual legal bills by being ready for what’s to come. According to a recent FoxBusiness article, the following five tips are some that every soon-to-be-divorced couple should pay attention to for help making it through the process:

1. Evaluate your assets
The house is the biggest asset that most couples possess but there are still usually many more that qualify as marital assets that will need to be divided. People often forget about pensions from past jobs or stock options and deferred compensation plans. Such assets have values that are paid out in the future, not always simple divisions today.

2. Weigh your debt
To begin, prepare a summary of the last 12 months of all credit card and utility bills as well as personal and jointly held loans. Such a history will help you decide who should take on which debts. It’s important not to take on responsibility for debt associated with property you don’t control. For instance, if you are responsible for paying the car loan, you should be the one driving the car. This helps eliminate a lot risk and being liable for the actions of a soon-to-be former spouse.

3. Run a credit check and history
Everyone should conduct an annual credit check with all three agencies. Knowing where your credit stands prior to divorce can help prevent headaches down the line. It’s possible that you’ll discover a credit card or line of credit that you never knew existed, correcting inaccuracies (or preventing fraud) is important.

4. Track how much you spend
Taking stock of your spending habits and creating a realistic budget for your post-divorce life is crucial. Understanding that your old income will now be used to support two households is important. The same amount of money is now going to pay two rents or two mortgage payments, thus lifestyle adjustments will need to be made. People often underestimate how much they spend and putting everything down on paper forces couples to face the hard truth.

Charlotte Divorcing Couples Should Watch What They Text

Published on: February 21, 2012 | On behalf of Arnold & Smith, PLLC

According to an article in the Chicago Tribune, North Carolina couples who are heading for divorce should be careful about texting because their heated words could be used against them later in court.

According to statistics from the American Academy of Matrimonial Lawyers (AAML), many top divorce attorneys say they’ve seen a spike in the number of cases using evidence from cellphone text messages over the past several years as the prevalence of smartphones increases exponentially.

The rise in text message evidence becoming a part of divorce cases follows a rise noticed a few years ago by the AAML relating to evidence from Facebook messages. “With emails you can think about and rewrite them. There is a window of opportunity to rethink what you are saying but text messaging is immediate,” said Ken Altshuler, the president of the AAML. “We get a lot of text messages that people send out without thinking.”

Altshuler described text messages as “spontaneous venting” that often come back to haunt people. They’re very easy to write and distribute quickly but the implications can be far longer lasting. Text messages on your phone seen by others can also be mentioned and brought into divorce proceedings. Altshuler said, “I have used text messaging for cross examination.” He continued by mentioning that he had also submitted texts as evidence. “I would say in the last six months there have been a lot of text messages involved in litigation. For whatever reason, people are texting more and not thinking about what they are texting.”

According to the AAML survey text messages were simply the most commonly used form of electronic evidence derived from cellphones. Other information taken from smartphones include emails, phone numbers, call histories, GPS and Internet search histories. As such, North Carolina couples need to be careful with what information they have sitting around that may later be used against them.

Altshuler believes that the reason for the surge in text evidence is that people have their guards down because they mistakenly believe texting is safe, all because the messages aren’t easily printed out. This is a false sense of security, as the recent poll shows. While text messages cannot easily be printed, it can be done.

Protecting Your Finances in a North Carolina Divorce

Published on: January 10, 2012 | On behalf of Arnold & Smith, PLLC

Divorce is a process that can be mentally, emotionally and financially draining. While there’s not always much to be done about the mental and emotional pain, financial disaster can be mitigated with a little planning. The following are several tips by Angela Colley of BusinessInsider.com on how to prepare your money for a divorce.

1. Separate your bank accounts
Many couples preparing for a divorce will leave their joint checking accounts open, not wanting to appear spiteful. However, an irresponsible spouse might not be so considerate and could easily drain your joint account before you realize what has happened.

Establishing separate bank accounts and dealing with whatever uncomfortable conversation that might cause is better than taking the financial risk of inaction. The best advice would be take half the money from any joint account and place it in your own checking account.

2. Protect your credit
If you and your former spouse have joint credit accounts all the hard work you put into building a solid score can evaporate with a few bad financial decisions by your ex. Establishing separate credit and loan accounts is critical.

First things first, order an official copy of your credit report from all three credit reporting agencies: TransUnion, Experian, and Equifax. Review the reports carefully and flag any accounts you share with your spouse.

Though it may be uncomfortable, have a direct conversation with your spouse and decide who wants to keep what and how the accounts ought to be divided.

Actually dividing these debts isn’t so easy. You cannot just call a lender and ask to have your name removed if the obligation is joint. Instead, the debt must usually be repaid or refinanced in the name of only one spouse. If the spouse responsible for the debt isn’t capable of having it refinanced alone then selling the asset or paying off the bill is usually the best move. Signing over control of an asset while leaving your name on the loan is a recipe for disaster and should be avoided at all costs.

3. Check on your insurance coverage
If you’ve shared insurance coverage with your spouse you may now find yourself out in the cold during a divorce. Plan ahead and negotiate a specific time to change the insurance, giving yourself enough time to secure new coverage. Make sure that you have the necessary health, auto and homeowners (or rental) insurance.

Divorce Can Kill

Published on: January 3, 2012 | On behalf of Arnold & Smith, PLLC

According to a recent report on HuffingtonPost.com, a new study entitled “Divorce and Death” appearing in “Psychological Science” shows that failed marriages can actually kill at the same rate as cigarette smoking or obesity.

The results of the study were shocking as the stark numbers showed that the risk of dying is a full 23% higher among those that have gone through a divorce than married people. Researchers were surprised as they did not believe life expectancy would be slashed to ages comparable with smokers, heavy drinkers, and the obese.

Study authors David Sbarra and Paul Nietert make sure to point out that the association between divorce and death “cannot be deemed causal.” They never intended to imply that the moment you sign divorce papers your life expectancy is slashed. Instead, the research indicates, “there is something uniquely difficult about remaining separated or divorced that accelerates time of death.”

It’s the cumulative strain of being a long-term single parent or the burden of a persistent conflict with an ex that causes the stress that can be a killer. Experts have long believed that interpersonal relationships and health are entangled in a complicated and confusing way. In a sad way, one spouse’s damaging personality trait – whether hostility or negativity – can be responsible both for killing the marriage and, in the long run, for killing the ex.

Ex-husbands are at significantly higher risk of a premature death than their ex-wives. The reason is that it appears wives help keep their husbands alive. Men generally die younger than women, but wives are de facto caregivers. Studies dating back as far as the 1970s have shown that without a woman around, a man’s health fails and he typically refuses to do much about it. Though technology and the ease of self-diagnosis have improved the situation, these are usually afterthoughts. Companionship with a nurturing woman is a built in prevention for sickness in old age.

More Divorce After 7 Years? Or 3?

Published on: October 20, 2011 | On behalf of Arnold & Smith, PLLC

The common saying is “the seven year itch.” The theory being that around the seven year mark in a marriage, the couple is likely to become too comfortable and maybe even disenchanted with the relationship. Similarly, it may be that the rush of first being married has worn off. Or, maybe the couple has finished having babies so that thrill is gone too. Obviously, there is no formula which can predict with any certainty how long a marriage will last. Some end in divorce sooner, some end in divorce later, some marriages do not end in divorce. Perhaps the marriage ends when one of the spouses passes away.

But, according to a study in the UK involving 2,000 respondents, more couples run into trouble after the first three years of the marriage. The data seems to show that this is the point where the honeymoon phase really wears off. Similarly, this is also the point when the couple is likely to be making more significant financial investments together. Maybe the married couple signs an apartment least together, gets a joint bank account, joint cell phone contract, buy a house or maybe start having children (though it seems like couples are waiting longer and longer these days).

Equitable Distribution Appeal Ruled Interlocutory by North Carolina Court of Appeals

Published on: June 21, 2011 | On behalf of Arnold & Smith, PLLC

Another North Carolina equitable distribution case appeal was ruled to be interlocutory by the North Carolina Court of Appeals in Williamson vs. Williamson. Here the North Carolina District Court Judge announced its decision from the bench – meaning the Judge stated the ruling in open Court. When the wife appealed the equitable distribution ruling, the decision had not been reduced to a written Order and the issue of alimony was still pending before the Court.

Equitable Distribution Ruling by North Carolina Court of Appeals

Published on: June 17, 2011 | On behalf of Arnold & Smith, PLLC

The North Carolina Court of Appeals rendered a decision relating to equitable distribution. In the case of Bodie vs. Bodie, the plaintiff appealed an equitable distrubution order which indicated on its face that it was a final decision on the issue of equitable distribution. Importantly, alimony was still pending at the time of the entry of the equitable distribution order. The North Carolina Court of Appeals ruled that the language in question did not satisfy Rule 54(b) and, therefore, the order was interlocutory and not yet appealable.