Before You Make A Grab For Marital Assets, Consider This

Marital assets are always a major concern in divorce. Who gets the house? The car? That ugly Dalmatian statue in the foyer that neither one of you could ever get rid of? When dividing property, it can be tempting to try to take everything you can carry, but that’s not the smart approach. There are several long-term financial implications of divorce that you should consider before staking your claim on the beachfront condo.

Divorce will affect your Social Security benefits. Spouses are allowed to collect their own Social Security benefits or an amount equal to one-half of their spouse’s, whichever is more. This means that if one spouse does not work, or works much less, that spouse would likely want the spousal benefit. However, you cannot receive spousal benefits unless you are married for at least 10 years. When divorcing, take into account your future Social Security needs when deciding on asset division.

Taxes ”“ no one likes to think about them, but divorce is going to change your taxes drastically. First, you will lose your Married Filing Joint status, which can increase your tax rate (sometimes dramatically). Plan for this. Second, you may lose the ability to claim children as dependents for the tax benefits. Figure out which parent is going to claim the children as dependents at divorce time, not tax time. All of this information can help lead to a more equitable division of assets.

Too often, spouses don’t think to make copies of important financial documents before splitting up. This is bad because these documents may end up in a pile of papers in the bottom of a box, tucked into a storage unit or attic, never again to see the light of day. If you don’t have copies of those documents and are not on speaking terms with your ex, you may face financial consequences in the future.

Your credit might take a dive after divorce, or maybe you don’t have any credit because you didn’t handle the family finances. Make plans to establish credit before your divorce (through a secured credit card or a loan) so you don’t find yourself scrambling with your finances post-divorce.

Our Denver divorce attorneys are well-equipped to assist you in determining the most equitable divorce settlement for you and your spouse.

What Happens To Your Credit Card Debt In Divorces?

A 2013 study showed that nearly 40 percent of U.S. households have credit card debt, with an average of $5,700 in debt. When a couple is getting divorced, credit cards are one of the many things that need to be taken care of. Who gets the debt? Who keeps the card?

Like property, debt in Colorado is divided equitably, not necessarily equally. The courts will look at the total assets and debts of the couple, among other factors, to determine what the fairest split would be.

The first step in solving this issue is identifying which debts you are responsible for. Your credit rating and debts are allocated to your name, and the only way to view this is by requesting your credit report from one of the three major reporting bureaus. This report will inform you which debts are yours and which ones you share with your spouse. From there, you can start the process of removing your name from those joint accounts and closing them where necessary.

A word of warning: you should be diligent in paying all your bills, including those you share with your spouse, both before and after your divorce filing. Divorces can get contentious, and if you name is on an account and your spouse stops paying for it, that can hurt your credit. While many card companies will not allow you to close an account with a balance on it, you may be able to have the company freeze any joint accounts to protect your credit until divorce is finalized.

Denver divorce law attorneys assisting clients in Colorado in matters of property and debt division during divorce.

What Happens To My Retirement Money In Divorce?

In Colorado, assets acquired during marriage are equitably divided between spouses in divorce. Retirement funds are often the largest liquid asset involved in divorce, and come with a lot of complex issues when it comes to division. The largest of these issues is taxes, and depending on the type of retirement fund you have, there could be financial ramifications of dividing retirement money that you should be aware of before a divorce is finalized.

Proper Division Of IRAs

When transferring assets from one spouse’s IRA to another’s, you must label the transfer as “incident to divorce.” This is necessary to avoid penalties for early withdrawal from the IRA. Both the sending and receiving IRA custodians must sign off on the transfer and it must be approved by a judge. This process must be completed within one year of a divorce settlement to avoid review by the Internal Revenue Service.

Proper Division Of Qualified Plans, Such As 401(k)s, Defined Benefit Plans & Pensions

To divide a qualified plan between two parties, you need a qualified domestic relations order (QDRO). A QDRO is a court order that recognizes a former spouse’s interest in their spouse’s qualified plan assets. Using a QDRO, the “participant” transfers assets into the “alternate payee’s” IRA or qualified plan. Much like transfers incident to divorce, these must be reported correctly to the courts and retirement custodians to avoid any unfortunate tax penalties.

If you have questions regarding the division of your retirement accounts in a Colorado divorce, our Denver divorce attorneys are well-equipped to assist you.

Dissipation Of Assets In Divorce & How To Fight It

In an ideal world, divorcing couples would be able to sit down with one another and separate amicably. Often, this is not the case. In particularly contentious divorces, greed, anger and spite can lead to vicious debates regarding assets. And sometimes, vindictive spouses will fight dirty to enact revenge on their exes. One such trick is known as dissipation of assets, and it can cause serious complications for one or both parties.

Dissipation of assets is a fancy legal way of saying that one spouse wasted marital assets to deprive the other party of those assets. For example, a husband decides to spend a significant amount of money on jewelry for a mistress. That money, in divorce, would be subject to equitable division between both parties, but because the husband dissipated those assets, the wife now faces financial struggles because of her husband’s malice.

Colorado offers some protection against this type of behavior in the form of the Automatic Temporary Restraining Order, or ATRO. This injunction helps prevent either party from disturbing the peace of another party, including prevention of dissipation of marital assets. While the ATRO is in effect, neither party can transfer, encumber, conceal or dispose of property without a court order or the other party’s consent.

Additionally, the services of an attorney can help you prove that dissipation occurred, which can help you fight for a fairer settlement. We can conduct interrogatories and request documents, financial releases and depositions to trace these dissipated assets.

Our Denver family law attorneys are ready to assist you in the process of asset division and protecting your assets from your spouse.

Who Gets The Tickets? What To Do About Time-Sensitive Property In Divorce

With all the hubbub about the rise of the Chicago Cubs, baseball fans have been kicked up into a frenzy, celebrating the momentous victory of the Cubs after 108 years without a World Series win. So, what happens when you’ve got tickets to the crucial game, but your spouse decides it’s time to get divorced?

One woman has taken her estranged husband to court over this very issue. Nancy Riddle of Chicago filed an “Emergency Petition for World Series Tickets” at her local county courthouse. Her husband John Riddle had two tickets that he planned to use to take the couple’s 12-year-old son to Game 4, where the Cubs lost to the Cleveland Indians. Nancy believed that she should have been able to take her son using the tickets, which were purchased by John as part of a season ticket package with some of his friends prior to the divorce filing.

The courts went middle field on their response. While John was allowed to keep his tickets, he was ordered to purchase his wife a comparable ticket as well.

Who Gets Sports Tickets In Colorado Divorces?

Colorado is an equitable division state. This means that property acquired during marriage will be divided equitably (if not equally) in divorce. Using a local team as an example, let’s say a Colorado couple has tickets to the Denver Broncos and both parties wanted to attend the blowout Super Bowl that we won this year (Go Broncos!). If the tickets were purchased during marriage, the courts would likely consider them marital property. As such, both parties would have a claim to the tickets, and through an emergency petition the parties may be able to settle the issue before kickoff.

Our Denver family law firm can help you take control of your family situation to prepare you financially, emotionally and logistically for your future.

Protecting Your Inheritance During A Divorce

If you have received a substantial inheritance and are currently married or are soon-to-be married, you need to understand how divorce might affect your inheritance.

Whether you will have full control over your inheritance depends largely on what you do with it. In Colorado, property is divided equitably in divorce. If you receive an inheritance, that inheritance is what is known as separate property. Separate property is not divisible in divorce; however, depending on how you handle your inheritance, it is possible for it to become marital property.

Commingling Assets

A way that your spouse could lay claim to a part of your inheritance is through what is known as commingling assets. This means that you combine your inheritance assets with your joint marital assets. This usually happens when the inheritor places money from inheritance into a joint checking account, but that’s not the only way assets can be commingled. Commingling also happens when inheritance is used in a joint purchase ”“ for example, using inheritance money to purchase a marital home.

One way to protect your inheritance, or a part of it, is to obtain a postnuptial agreement dictating which part of the inheritance is marital and which is separate. The easiest way to protect your inheritance though, is keeping it in a separate account. Know this, however ”“ if you share a portion of your inheritance, but keep some of it in a separate account to protect it from divorce, the portion you hide away may still be considered marital property. Sharing a portion of your inheritance creates a presumption that you intend to share all of it. If this is not the case, proving that you did not intend to share the whole inheritance is a burden placed on you, the inheritor. This means you must have ways of showing that you did not intend to share the whole thing, such as requiring both parties’ signatures on joint accounts for withdrawals. If you do commingle assets, a divorce lawyer may be able to help you trace back the assets to the original owner, which can help your argument that the property was separate, not marital.

If you have questions about property division and are worried about your inheritance in divorce, discuss your concerns with a Colorado family law attorney.

Should I Divorce My Spouse In Order To Get More Social Security Benefits?

Can you collect Social Security benefits from an ex-spouse if you have remarried since your original divorce?

It’s actually more complicated than the Social Security Administration (SSA) makes it sound. There are many reasons why a remarried spouse might seek retirement benefits from an ex. Let’s use an example: suppose you are remarried and you collect Social Security. Your current spouse is still working, but perhaps you could use a little extra to help with bills, such as your current spouse’s recurring medical expenses. Is it possible to collect on a retired ex’s Social Security so that your current spouse can retire without breaking the bank?

According to the SSA, you can collect Social Security benefits from your ex-spouse’s retirement if you were married for 10 years, but you cannot be remarried. This begs another question: should you and your current spouse get a divorce so that you can collect on your ex’s benefits, in addition to your own and your current spouse’s?

Explaining The Excess Divorced Spousal Benefit

If you choose to divorce your current spouse in order to “triple-dip,” as it were, on Social Security benefits, you need to understand how the excess divorced spousal benefit works.

The excess divorced spousal benefit is equal to 50 percent of your ex’s Social Security benefits, minus 100 percent of your own. The surplus will be added to your own benefits. So your first step is to figure out if this equation leads to a better outcome for you, considering the costs of divorcing your current spouse as well as any changes that need to be made regarding estate planning, wills, etc. If it would be a boon for you, then you don’t need to worry about the SSA coming knocking ”“ but think carefully about the benefits of marriage you would lose and whether those outweigh the excess divorced spousal benefit you would receive.

Our Denver family law attorneys are well-versed in matters that pertain to divorcing retired couples and can help you plot out your best course moving forward.

Can I Lose My 401(k) To A Divorce?

Senior divorce (you may have heard it called gray divorce or silver divorce) has been on the rise since 1990. Suppose you have a 401(k) you’ve been paying into for many years. You’ve had a happy marriage as well, however, that marriage has been falling apart at the seams. Finally, you are told that your spouse wants a divorce ”“ what happens to that retirement account? Is it yours, or will it be divided between you and your spouse during the divorce proceedings?

The division of retirement funds in divorce needs to be understood by both parties prior to the divorce, because the sudden financial shakeup that results can drastically alter a person’s retirement plans.

Retirement Funds Are Marital Assets

According to a recent survey from the American Academy of Matrimonial Lawyers (AAML), the three most commonly fought over assets for divorcing couples over the age of 50 are alimony (called spousal maintenance in Colorado), business interests and retirement accounts. When it comes to your retirement account, you have some options:

  1. Because marital assets must be divided equitably, you can choose to keep the entirety of your 401(k) while giving up other marital assets of comparable value. When considering this option, you must look at the long-term tax ramifications of such an arrangement as well as the current and long-term value of the assets you are exchanging to keep your 401(k). What may be equitable division now may not look so equitable in the future.
  2. You can split the 401(k) with your spouse. To do this, you must have a Qualified Domestic Relations Order, or QDRO. Your attorney can help explain how a QDRO can help, or you can read our related blog here.
  3. If you are over the age of 59 ½ or have left your company, you can roll over a portion of your 401(k) into an IRA to be awarded to your ex-spouse. This option may be desirable because it allows you to remove the funds from your 401(k) without any tax penalties, as well as giving your spouse more control over the funds awarded to him or her.

Our Denver divorce attorneys can help you determine the best course of action moving forward for clients divorcing after 50.

How Do I Split A Joint Account In Divorce?

What’s yours is mine and what’s mine is yours, right? In marriage, tons of assets get commingled for one reason or another ”“ perhaps the couple likes the transparency joint assets afford, or the convenience of only needing one account to pay all of those bills. But what happens when a marriage turns sour, and suddenly the last thing you want is for your name to be appended to an account with your ex? Before you get divorced, you need to shut down that joint account.

Fortunately, the process of closing a joint account is not all that difficult, although the particulars of your relationship may make it so. Here is some advice to get that joint account split as easily as possible.

  1. Before you do anything with your joint account, create a new one in your name only. This is the account you will use for your everyday expenses ”“ try to limit your use of the joint account, and stop using it entirely if possible.
  2. Generally, it’s best for you and your spouse to bite your tongues and shut down the joint accounts together. Some institutions such as banks and credit unions require both parties to be present for an account to be closed.
  3. If you are not on good terms with your ex, you should speak to your lawyer as soon as possible regarding any funds kept in joint accounts, especially if you are afraid that your spouse might empty the account and leave you high and dry. Once the divorce petition is filed by either party, a financial restraining order is entered. This is a court order that prevents either spouse from making any big changes to financial accounts.
  4. If the joint account is associated with any recurring debits or deposits, you should make sure to halt those before your account is closed. You don’t want people coming after you for money or late fees associated with the closed account. And if the account receives a deposit after it is closed, it may be reopened by the institution that holds the account ”“ and then you’re stuck on that joint account again until you go back and close it.

Our Denver divorce attorneys can help you plan for your financial future following divorce.

Should I Base My Divorce Demands On Other Divorcees’ Settlements?

How much of your marital assets are you owed in your divorce? If it is your first time going through divorce, you might not have any idea what to expect when your assets are divided and the divorce is finalized. Will you get the house? The car? How much of the joint savings will go to you? Retirement funds? Stock options? It’s a lot to think about!

Naturally, your best bet in learning what to expect is to speak to someone who knows ”“ but that doesn’t mean speak to other divorcees to see what they got in their divorce settlements. Maybe your best friend or your sister have gone through this before, and you’re curious to see how well off they were after divorce ”“ but they are not the ones you should be basing your expectations on. Here’s why.

Stop Listening To Your Friends””Every Divorce Is Different

If you start probing into the lives of friends, friends-of-friends or family members who have gotten divorced, you might not stop to think that there is no one-size-fits-all divorce settlement. Maybe you are planning on paying a certain amount of child support, until you hear from your cousin that his friend doesn’t have to pay any at all, despite having less time with the kids than you do. Or perhaps you make much more money than your spouse but don’t think it’s fair that you will be paying temporary spousal maintenance while your brother didn’t have to when he got divorced.

It is important to remember you are only hearing one side of the story, and you are lacking the full set of facts. It’s easy to think that you are being given a bum deal in divorce when it seems like everyone around you is doing great.

You should talk to someone about what you want in a divorce, and what you think is fair ”“ but that someone should be an attorney, not Jane Doe who lives at the other end of your street. Don’t be afraid to ask your attorney questions about how divorce works in Colorado and why the terms of your divorce are the way they are. If you don’t understand the documents, speak up. If you don’t know why you have to pay alimony, speak up. Knowledge is power, and ultimately your goal should be to ensure a fair divorce settlement. Don’t get angry because of the way other peoples’ divorces go ”“ they are not you, and their divorce is not the same as yours.

Our Denver divorce attorneys offer mediation services for prospective divorce clients and are committed to ensuring equitable distribution of assets in your divorce.