Should we be Happy about the High Divorce Rate?

FUNNY-DIVORCE

Should we be Happy about the High Divorce Rate?

According to the U.S. Census Bureau data, our sour mood on marriage has been sustained for three consecutive years in a row, 2009-2012 with signs that it hasn’t abated. We’ll see what the newest numbers bring. The number of divorces in 2012 reached a record-high of 2.4 million. Not only are we ending more marriages but fewer are being created according to the National Center for Family and Marriage Research. Their findings show the marriage rate is down a whopping 60%.

If you are a believer in marriage, even hoping it’s coming for you, these stats can put you down in the dumps. But just like with every thunderhead the clearest sunny day follows. According to the U.S. Census Bureau, all this divorcing is good for the economy. Two separated people have to get two separate houses, or at least two distinct places to live. That means new leases or mortgages and more money flowing into the economy. That’s good for everyone else. The bad news? There isn’t much benefit to the individual.

Single women are the biggest growing demographic in the economy. They are also buying houses in droves according to the U.S. Association of Realtors. Richard R. Peterso, author of the book Women, Work, and Divorce recently said that, “Divorced and never-married women are more likely to work and to work more hours per year, and are less likely to withdraw from the labor force, than married women.” According to investment website LearnVest.com those who are single shell out more for the privilege of living alone, $67,000 more over six decades.

A recent story in The Atlantic stated that women can expect to make one million dollars more if you take taxes, healthcare and other things such as this into consideration. Though a bad economy usually increases divorce rates, due to the strain it puts on couples, some experts believe lots of people are staying separated, cohabitating instead of getting married and altogether avoiding divorce. Only with time will we see what actually happened to marriage due to the Great Recession.

What to do if you think your Spouse has Hidden Assets

Hidden-Assets

There was a woman in California who won $1.8 million in the lottery. She filed for divorce from her husband of 25 years and failed to disclose her windfall. But the husband found out about it and the judge granted him all of her lottery winnings.   Failing to disclose all of your assets during the divorce proceedings in a no-no and you may end up with a far worse judgment than you would have if you were honest. That said, what do you do if you think your spouse has hidden assets that weren’t brought up during the divorce proceedings? One thing you can do is hire a forensic accountant to investigate. You can find them online via a Google search, or even in the phone book. Your divorce attorney or accountant may also be able to recommend one as well. These are special accountants who know how to search for hidden assets. But what if you don’t have the financial wherewithal to hire someone like that? During the discovery process, your divorce attorney can do a lot of things to have these assets discovered. If you can’t count on your ex you certainly can’t rely on their financial affidavit. Your attorney should review the following documents carefully: pay stubs, bank statements,   tax returns, cancelled checks, credit card statements, brokerage statements and any other financial statements.  Each document should be scrutinized carefully to extract the proper information.

Here are some things you can do to make sure you have the best chance of bringing all of your ex-spouse’s assets to light. First, take a good look at the tax return, the 1099 and the brokerage accounts. Has all interest and dividends been disclosed? Next, run a public records search on your ex’s name. Do they own any property that perhaps wasn’t brought up? Now it’s time to look at your former spouse’s pay stubs and other documents. Take a good look at the bank statements. Is all the income accounted for? Does all income have a record of deposit? For example, if your ex makes $10,000 per month but there is only a record of $3,000 being deposited per month, where has the other $7,000 gone? Now it’s time to look at any cancelled checks. Check out the bills which they pay. Look at mortgage or rent payments, credit card payments, auto loans, utilities and others. Are there any bills being paid from a different account than that which you have knowledge of? If you believe the funds for these bills are coming out of a separate bank account of which you have no knowledge, your previous spouse may be hiding assets. Next, have your attorney subpoena your spouse’s employer to request to find out what kinds of benefits your ex has such as stock options, a 401K or some other retirement plan or a deferred compensation plan. These should also be included during the disclosure of finances phase. If they haven’t, let your attorney know and he or she should make sure that it is included.

Check out the monthly income disclosed. Now take a look at the family expenses and add them up. If the income is lower than the expenses, consider whether you and your ex-spouse were dipping into savings or some other area in order to make ends meet. If not, there is likely financial assets that aren’t being disclosed. Look carefully at the account statements. Look for transfers or withdrawals that don’t seem to end up anywhere else. Your attorney may need to subpoena back documentation to see where and in whose account the money ended up. Look over canceled checks, wire transfers, credit card statements, purchases of significant items such as works of art, jewelry, antiques and so on which may not have been disclosed. Look for cancelled checks, wire transfers, or payments on credit card statements that go to insurance or property taxes on a property other than your own home. This can indicate undisclosed real estate. If you discover any of these inconsistencies it may now be time to depose your ex-spouse. They can’t lie under oath or they will face sanctions. Now you can ask about bills being paid out of secret accounts, property taxes being paid on real estate you didn’t know about or whatever you had discovered. Divorce can be a very painful, high anxiety affair. But it pays to keep your head about you and protect yourself. The outcome of the divorce proceedings can affect your life for years to come. So it’s important that you and your attorney have access to all the information you need in order to safeguard the best outcome possible. For more on this topic, read Forensic Accounting for Divorce Engagements: A Practical Guide, Third Edition by Donald A. Glenn and Ezra Huber.

Seek Advice From Beyond Your Friends Because A Divorce Is More Than Emotional

divorce more than emotional

 

Many people file for divorce for primarily emotional reasons; they no longer love their spouse, they feel trapped and want to regain their freedom, or they feel generally unhappy in their marriage.  We commonly go to our friends for emotional advice, but we need to take into consideration that a divorce is more than an emotional process.  A divorce is a legal ending to the contract of marriage and therefore has many repercussions beyond the emotional ending of a relationship.  Your friends may tell you, “you’ll be so much happier when you’re single”, which could be true depending on how your marriage is going, however, unless your friends have went through a divorce themselves, you should really seek advice about divorce from someone who knows.  A divorce can get extremely messy and complex, way beyond emotions, into finances, property, child custody, and more.  Sometimes it’s worth going to a marriage counselor and trying to work things out before filing for a divorce.  If things don’t work out despite your efforts to make things right again, at least you’ll have a clearer idea of where you and your spouse stand in terms of the relationship and how you want things to progress.

If you file for a divorce based purely on emotions, you’ll likely regret it later once the actual divorce process begins.  A divorce requires a lot of careful planning in order for it to go relatively smoothly and you’ll want to have some level of insight as to how your life will be after the divorce is completed.  You might have an idea in your mind about what it will be like to be “free and single”, however, you may not be envisioning the difficulties that come with the single life.  Married life is often more privileged because there are generally two incomes, shared payment of expenses, shared responsibilities of taking care of the household, childrearing, and so on… Once you’ve become accustomed to married life, it might be difficult to gain a realistic image of being single again.  This is why it’s crucial to gain insight from people beyond your friends, from financial advisors, attorneys, and possibly web-based portals that provide information about divorce from real, everyday people like you.

Equitable Distribution Of A Business Will Likely Be Based On Fair Market Value

business division

When discussion of equitable distribution includes a business from the marriage, the value of that business is decided based on what is called fair market value.  The fair market value of a property is the estimated value of the property itself if it were to be put up for sale.  The value of the property may be different depending on how the business is conducted and therefore it cannot be assumed that the business would be worth the revenue it is currently taking in or its past revenue.

For instance, if you run a private business and your spouse asks for a divorce, the fair market value of the business will be the hypothetical selling value of it, not the current revenue from the running of the business.  Your combined incomes from the marriage will still be up for equitable distribution, but the value of the business will be separate from the income you receive from it.  If someone were to purchase the business from you, that person would not necessarily conduct business in the same manner as you did, so the value of the business cannot be based on your personal revenue.

This is more important to keep in mind if it’s your spouse that owns the business and you’re the one seeking partial benefit or value from it.  Don’t assume that you will gain a large amount of his or her revenue from the business.  Speak with your attorney about fair market value and discuss your potential gains and losses from the divorce.  It’s common for the lesser earning spouse to receive a lot less from a divorce than he/she had anticipated prior to filing for the separation.  It’s important to do your research and speak with divorce and financial experts.

There Are Ways To Ensure That Your Separate Property Doesn’t Become Marital Property

separate property

If you’re concerned about keeping your separate property or financial assets from before your marriage out of the possession of your spouse, then there are certain steps you can take to make sure this happens.  First of all, whatever the property or financial asset may be, keep it in only your name throughout your marriage.  Secondly, do not put any money or other property acquired during your marriage in with your separate property.  Even if this is money you earned on your own, whatever you earn or acquire during your marriage could be considered marital property.  It’s safest to keep your personal property completely separate without mixing any new property or money with it during your marriage.  This will ensure that it remains separate and could potentially protect you from having to part with any of it in lieu of a divorce.

A prenuptial or postnuptial agreement would also help protect your separate property from being divided, however, this isn’t always possible as it takes cooperation from both parties to agree upon and then sign these agreements.  If you have already mixed marital property with your separate property, it could be too late to claim it as separate.