Demi Moore and Ashton Kutcher have a prenup? Maybe you need one?

Demi Moore and Ashton Kutcher have a prenup? Maybe you need one?

Even if the age gap between you and your partner is not very large or your net worth is not in excess of $290 million, a marital agreement may be for you.

A marital agreement is a contract. Common names for a marital agreement are a prenuptial agreement, if entered before you marry or postnuptial agreement, if entered after you marry. Michigan recognizes both types of marital agreements.

It is unfortunately true that every marriage ends. Statistically, ½ of marriages end in divorce and the other ½ of marriages end in death.

Michigan law provides that a properly entered marital agreement is an enforceable contract. In simple terms, the divorce and probate laws will not control your destiny, your marital agreement will.

Marital agreements are powerful tools to plan your future, determine property rights and alimony. The agreements can dictate not only what happens if you divorce, but also what happens when a spouse dies.

The marital agreement can either expand or eliminate your rights to property, probate, homestead, and the right to act as an executor and administrator of your spouse's estate.

Another common use of a marital agreement is as a legal separation agreement. The parties enter into the marital agreement and live separately, while maintaining the financial benefits of marriage. With a marital agreement, there is typically no public record of the contract. Therefore, the parties can maintain their health insurance, tax benefits and other benefits of marriage without the necessity to live as husband and wife.

Demi Moore and Ashton Kutcher should have a prenup, maybe you should too.

Daniel

Why Kim Kardashian does not have to give back her engagement ring.

Married for 72 days?

Keep the ring!

Etiquette books may say if a marriage has lasted less than a year, then an engagement ring should be returned. Michigan law, is not politically correct on this issue. If the Kim Kardashian divorce was filed in Michigan, she would get to keep the ring.

Under Michigan law, as long as the parties go through with the wedding, the ring is a gift and need not be returned in the event of divorce. On the other hand, if a party breaks off the engagement, the ring is returned, regardless of the circumstances why the wedding was cancelled or who cancelled the wedding.

So the ridiculously large, the reported $2 million diamond ring Kardashian received from now-ex-husband Kris Humphries, she keeps it.

Now if they only had a pre-nuptial agreement . . .

Daniel

Citation: 244 Mich. App. 697,625 N.W.2d 136,2001 Mich. App.

Criminal considerations in divorce

Recent headlines shed light on a frightening application of Michigan law. On December 26, 2010, the Detroit Free Press reported that a Rochester Hills man faces up to 5 years in prison - - for reading his wife’s email.

Leon Walker of Rochester Hills is being charged with unlawfully reading his then wife’s email which substantiated that his wife was having an affair with a man who had once been arrested for beating her in front of her son.

As a Michigan divorce specialist, I am qualified to inform you that the conduct of a spouse is relevant in the division of property, an award of alimony and in custody and parenting time decisions. Specifically, evidence of Mrs. Walkers’ adultery was relevant evidence in the underlying divorce case.

Michigan law is clear. It is unlawful in Michigan to intentionally and without authorization access the email of another. The statute is Michigan Compiled Laws, section 752.795, P.A.1996, No. 326, § 1, Eff. April 1, 1997.

In addition, Mrs. Walker’s adultery was also unlawful in Michigan. Michigan law is equally clear. It is a felony to commit adultery in the State of Michigan. The statute is Michigan Compiled Laws, section 750.30, and the statute is current through P.A. 2010, No. 226, of the 2010 Regular Session, 95th Legislature.

A divorce can be a highly emotional event. Michigan law instructs judges to decide divorce cases based on equity (fairness) using statutes and case law for directions on what is fair.

The prosecution of Mr. Walker is troubling because it sends a message of fear to divorcing couples. As if the emotional cost of a divorce were not enough, now people have to fear going to jail if they divorce. If you stop and think about it, in almost every divorce case a crime is committed. Take the following statutes into consideration:

MCL 750.30: Adultery, a crime punishable by more than one year in prison;

MCL 752.795: Accessing computers to acquire . . . or use computer services; (e.g. reading email) a 5 year felony.

MCL 750.539a: Michigan Eavesdropping statute: To amplify or transmit any part of the private discourse of others without the permission of all persons engaged in the discourse. (e.g. recording of telephone calls, other audio and videotape recordings, reading text messages . . . )

18 USC sec. 2701 Store Communications Act: The act makes it a Federal offense to access an electronic communication while it is in an electronic storage system.

It is interesting to note that courts are split on the application of these laws in domestic relations cases and for good reason.

Imagine every case of adultery, a spouse reading an email, or text message being prosecuted as a crime in Michigan. How many politicians, doctors, lawyers, neighbors, friends, relatives would be convicted felons?

The selective prosecution of Mr. Walker is a troubling precedent.

What's yours is both of yours? Maybe! The dangers of commingling assets.

The Michigan Court of Appeals has recently changed the rules regarding commingling of assets. Lawyers must advise their clients accordingly and clients should seek competent legal advice before commingling assets with his/her spouse.

When dividing property in a divorce, a primary consideration is whether the property is 'marital' or 'separate'. Generally, property acquired during the course of the marriage is 'marital' and subject to division in the event of divorce. Conversely, property acquired before (or after) marriage is separate property and not subject to division in the event of divorce.

However, there are a number of exceptions to the general rule set forth above. One notable exception is the commingling of a separate assets. The exception typically arises in this situation. One spouse has separate assets (e.g. savings from before marriage) and invests the money in the marital home, the home is then refinanced a few times with cash out and the parties continue to pay on the new mortgage. In this situation, Courts have ruled that the separate investment of a party has become marital once commingled into the marital home. More specifically, because the separate property is no longer traceable to the separate source (because of the refinancing, cash out, etc.) it has become marital and is subject to division in divorce.

Until recently, the prevailing view regarding commingling of assets has been that if money is traceable to the separate source, it would remain separate property and not subject to division in the event of divorce. However, the Michigan Court of Appeals has recently changed the rule. On July 13, 2010, the Michigan Court of Appeals decided the case of Cunningham v. Cunningham. The Court ruled that an asset from before marriage which was invested in the marital home during the marriage becomes marital property when it was invested in the marital home even though the down payment was traceable to one party.

Prior to commingling a separate asset, careful consideration must be given to how that asset will be treated in the event of divorce. What you thought was yours might unintentionally belong to both you and your spouse. If you are not married, consider a pre-nuptial agreement. If you are already married, consider a private agreement or post-nuptial agreement.

As always, feel free to call me to discuss any concern regarding your family law matters.

Daniel

The Findling Law Firm, PLC

414 W 5th Street

Royal Oak, MI 48067

(248) 399-3300

(248) 556-9783 (fax)

Email: Daniel@Findlinglaw.com

My blog: http://thedivorceguy-daniel.blogspot.com

My practice group's cool website: TheDivorceGuy.com

My firm's cool website: FindlingLaw.com

Changing pension or life insurance beneficiaries after divorce. A Judgment of Divorce may not be enough!

In almost every Judgment of Divorce, the parties either award or waive an interest in the former spouses' pension plan(s) or life insurance plan(s). However, if the benefit is governed by ERISA, a waiver in a Judgment of Divorce may not be enough and your former spouse may still receive benefits as an unintended beneficiary.

A. Pension

Recently, the U.S. Supreme Court Case, Kennedy v. Plan Adm. for DuPont Savings and Investment Plan, ruled that an ex-spouse cannot waive an interest in a former spouse's ERISA-governed pension plan through the divorce decree alone. The Estate sued the pension plan to recover the pension benefits wrongfully paid to the former spouse under the terms of the Judgment of divorce. In a unanimous decision, written by Justice Souter the Court held that the employer did not err in paying benefits to the former spouse even though the Judgment of divorce provided otherwise.

In light of the Kennedy decision, to ensure that a divorcing spouse's intent to waive her interest in the pension plan is effectuated, lawyers must get the proper forms from the plan administer before the entry of the Judgment of Divorce and make sure the waiving spouse signs them contemporaneously with the entry of the Judgment.

B. Life Insurance

While, Michigan law provides that a Judgment of Divorce must either extinguish or preserve in the Judgment any and all rights of a party in any policy or contract of life insurance, endowment or annuity upon the life of another, in which the spouse was named or designated as beneficiary, or to which he/she became entitled by assignment or change of beneficiary during the marriage or in anticipation of marriage.

However, in Metropolitan Life vs. Pressley, 1996 Fed. App. 0122P (6th Cir.) the Court held that the waiver in a Judgment of Divorce is not enough. A party must also affirmatively terminate his or her spouse as a beneficiary of an insurance policy because the provisions of ERISA preempt Michigan law and the effectiveness of this statutory provision. Therefore, after entry of a Divorce decree, the party should also change the beneficiary on the life insurance, endowment or annuity or risk allowing the ex-spouse to take the asset as an unintended beneficiary.

Drafters beware - the deductability of alimony

When drafting a Judgment or Order regarding alimony and spousal support, drafters beware that the mere use of the word "alimony" or "spousal support" does not affect the tax consequences of the payment.

Under I.R.C. sec 215, payments made for alimony are allowed as a deduction. However, in order for payments to be tax deductible, the eight requirements of I.R.C. sec, 71 must be met.

The eight requirements of I.R.C. sec. 71 are:

1. The payments must be made in cash; (e.g. providing a car is not deductible)

2. The payments must be to a spouse or on behalf of a spouse;

3. The payments must be made pursuant to a divorce or separate maintenance instrument;

4. The payments must not be designated as non-qualifying by the payor or non-taxable to the recipient;

5. Spouses may not be members of the same household;

6. The payment must terminate at the recipient spouse's death;

7. Spouses may not file a joint return; and

8. The payment cannot constitute child support.

So drafters beware and understand the application of I.R.C. sec. 71.

A family law specialist does make the difference in accomplishing a client's goals.

Daniel

U.S. Dad jailed in a custody battle - Parental Kidnapping Prevention and Remedies

This morning’s headlines shed light on one of the most frightening moments in a custody case with international ties:

An American dad is behind bars and his Japanese ex-wife is a fugitive from justice, due to an epic culture clash between Japan and the United States that is causing untold heartache for families.

While there is no one comprehensive integrated process for gathering and analyzing data and information on international child abduction cases, in 1988 family members abducted 354,100 children in the United States. (See http://www.ncjrs.gov/pdffiles1/ojjdp/190074.pdf) Clearly, many of these children were removed from the country.

What does the law provide?

A. The Hague Convention

The Hague Convention on the Civil Aspects of International Child Abduction (“Hague Convention”) provides for the prompt return of wrongfully removed children. Simply put, if the child resides in a member country, the member country will return the child. The Hague Convention is not in effect in Japan because they chose not to participate in the treaty. (For a list of the 48 Countries that participate in the Hague Convention, visit: http://www.travel.state.gov.

B. Parental Kidnapping Prevention Act (“PKPA”)

The PKPA provides that a felony warrant may be issued for parental kidnapping cases.

C. International Parental Kidnapping Crime ACT (“IPKCA”)

The IPKCA criminalizes international parental kidnapping and categorizes the crime as a federal felony.

Preventing International Child Abduction

A. The importance of a Custody Judgment

Courts speak through their Orders. A Custody Judgment or decree is an Order of the Court which sets forth the rights of the parents. In most cases, in order to obtain relief from parental abduction, there must be a custody judgment or decree setting forth the rights of the parents. A well-drafted custody and parenting time judgment may be the most important line of defense against international child abduction. For example, in high risk for abduction cases, a lawyer should draft the Judgment with appropriate safeguards such as a prohibition on international travel, supervised parenting time or avoid a joint custody order.

B. Make a record: Keep a list of addresses and telephone numbers of the other parent’s relatives, friends, and business associates. In addition, keep a record of the other parent's passport, social security number, bank accounts and physical characteristics.

C. Images and descriptions: Keep an updated photograph/video and description of your child (preferably every six months), include fingerprints and any special characteristics in your file.

D. Passport Issuance Alert Program: Federal Law requires the signature of both parents when obtaining a passport for a minor child. Notwithstanding, the State Department has implemented a Passport Issuance Alert Program which raises places the government on alert if a passport application is made for the minor child.

E. Be aware of “red flags”, such as:

• No strong ties to the United States;
• Friends or family living out of the Country;
• Limited financial reasons to stay in the United States;
• Quit his/her job, closed bank accounts (planning activities);
• A history of marital instability;
• Prior criminal records.

Child Abduction is a tragedy that can sometimes be prevented. If you have additional questions or concerns, please contact me.

Daniel

To discover assets, just add a "y".

There are only three ways for a lawsuit to end. The parties can settle, a court can decide, or the parties can dismiss the case. A divorce is no different. Assuming that the parties cannot reconcile and dismiss their case (after all, it only takes one person to make a divorce). How do you prepare?

Prior to settlement or trial, the parties should be well aware of both the nature and extent of their estate and all issues concerning their children, if any. Preparation is key. It would be unconscionable to settle or try a divorce case, without some way of verifying the facts.

The process by which we discover the nature and extent of the parties' estate is called discovery. It is easy to remember, just add a "y" to discover.

Discovery is the method lawyers use to verify facts relevant to the rights and obligations of the parties. Discovery includes the right to question each other under oath at deposition, Interrogatories (written questions), Requests to Produce Documents, and Requests for Admissions and the like, that are used to discover, among other information, all assets and liabilities of each party.

Many lawyers waive discovery in an effort to cut costs. While a waiver of discovery may be applicable in some cases, caveat emptor (let the buyer beware). If you decide to waive discovery, at a minimum you should demand that an affidavit of assets and liabilities be exchanged. It is not uncommon for a party to hide assets or liabilities that could easily be discovered.

"Don't ask, don't tell" does not only appy to the military. A keen lawyer may advise his/her client not to tell unless asked. If you never ask, you may never receive and in many cases, you may not be able to ask again. Once a Judgment of Divorce is entered, in most cases, the Judgment can never be re-opened to divide undisclosed assets unless you previously asked about it!

Daniel

Thedivorceguy.com

Continuing Legal Education

Last week, I attended the American Academy of Matrimonial Lawyers Advance-Level Family Law Seminar and saw many familiar Judges, referees and attorneys. I also made a mental note about who I didn't see. There were many.

It may be hard to believe, but, unlike a physician, there is no requirement for a lawyer to maintain his license with continuing legal education (CLE).

The law, like medicine is dynamic. It changes. I have been a speaker at a CLE seminar and attended them. In both cases, I always learn something new. The something new may be clarity of a nuance in the law or even information about new family law legislation in congress.

In either case, I always leave knowing I am a better lawyer.

The latest CLE was no different. I left with new information regarding a change in an IRS regulation that will have a dramatic effect on the allocation of the dependency exemption in divorce cases with minor children.

I believe, CLE should be mandatory to maintain currency as a family law attorney. If given the option, too many lawyers take the easy way out. So, who pays the cost? The client.

Daniel

Arbitration as an alternative to trial

Litigation can be expensive. Fortunately, most contested issues in domestic relations cases resolve themselves before trial. Notwithstanding, when the parties cannot agree the decision will be made by a third party. The third party is typically a Judge, but can also be an Arbitrator at the request of the parties.

At Arbitration, the parties pay a qualified, private, third party to decide the case. The Arbitrator's decision is binding.

Why would anyone want to Arbitrate a case when the Judge can decide for free?

Trial before a Judge can be expensive and slow. Adhereance to the formal rules can substantially increase the cost of litigation and the Judge's docket is often very long resulting in long delays. Arbitration is typically an informal process and the arbitrators' schedules are typically more flexible than a Judge's.

Arbitration can be used strategically as well. For example, the decision to arbitrate can be used to forum shop (choose a more favorable person to decide your case). Alternatively, the client's may want to introduce evidence without the risk of public disclosure at trial.

Why would anyone not want to arbitrate a case?

The answer is simple. In Arbitration there is no right to appeal. When a Judge decides a case, there is an absolute right to appeal.

The arbitrator's decision stands unless there is fraud, corruption or misconduct. If the Arbitrator makes the wrong decision, the decision will stand, even though a similar decision from a Judge would have been overturned on appeal.

It is important to clearly evaluate the pros and cons of arbitration. While arbitration can be an efficient and economical manner of resolving a disputed claim it can come at a cost.

Daniel

Festivous for the rest of us - Holiday parenting time.

There is a hilarious Sienfeld episode where a character introduces a new holiday (for those that do not celebrate Christmas) during the christmas season " 'festivous', a holiday for the rest of us. "

When addressing parenting time, holiday parenting time is often not a laughing matter. Typically both parents want to spend time with family during the holiday season. In many circumstances, the parties cannot agree.

Two trends have developed in dividing holiday parenting time:

The first trend is "alternate the holiday." This allows each parent to exercise the entire holiday during a year. Using Christmas break as an example, in odd years the father would exercise parenting time during the entire break and in even years the mother would exercise parenting time during Christmas break.

The second trend is "sharing the holiday." This allows each parent to share the holiday. Once again, using Christmas break as an example, in odd years the father would exercise parenting time during Christmas break. The parenting time would begin on the last day of school and continue uninterrupted through Christmas day @ 10:00 a.m.. The mother would exercise parenting time from 10:00 a.m. Christmas day until the end of school recess.

All to often lawyers include language similar to "the parties shall share the holidays." This lack of attention to detail may result in unneccesary litigation if the parties no longer agree. What does "share the holidays" mean anyway? This can easily be avoided by simply adding the phrase: "unless otherwise agreed by the parties, holiday parenting time shall be as follows:", followed by a specific default holiday parenting schedule.

What about Festivous? (or labor day? or your birthday? etc.)

Attention to detail in the holiday parenting time Order can lead to emotional and financial savings in the future.

Daniel

P.S.

As an aside, I have added a link to my practice groups core values: Who are we? How do we live? What do we promise? Visit: http://thedivorceguy.com/commitment.html.

What should I do? Some advice to clients and lawyers

Whenever someone is contemplating divorce, I remind them that they have three choices.

1. Get divorced;
2. Go to counselling;
3. Do nothing.

Expierence has taught me that all three decisions are good decisions even in lousy relationships. When struggling with a relationship, you should consider every choice. You should rely on a matirmonial attorney for the first choice and your friends/therapist for the remaining choices.

As a matrimonial attorney I know my limits. I am not a therapist. I take pride in separating my feelings from the case. I always advise a client on what I think they should do while never being afraid to do what my clients ask me to do.

Too often lawyers cannot separate their feelings with their client's. These lawyers try to act as attorneys and therapists. The attorney typically has an emotional attachment to their client's cause.

My advice, if you are an attorney don't be your client's therapist. If you are a client, stay away from an attorney that gives you emotional advice.

While a good friend or therapist is important while struggling with your marriage, your attorney should never be your thearpist. Doing so will typically work to your detriment and increase the cost of the case substantially.

Daniel

No Fault Divorce? - Just say know!

Michigan is a "no fault" state right? Well, right and wrong. While a Court cannot take fault into consideration when granting a divorce, the Court can take fault into consideration when dividing property, awarding spousal support or deciding custody.

Many clients and even some lawyers think that because Michigan is a no-fault state a person’s conduct before, during or after filing for divorce is irrelevant. It is not.

I always advise my client not to engage in extra-marital contacts during the divorce process. Not only does it complicate the emotional aspect of a case, it may have legal ramifications as well.

Understanding human nature, if someone is going to engage in extra-marital contacts, or otherwise engage in an activity that may be considered the basis of the breakdown of the marital relationship just say no. If that is not possible, know the consequences and use discretion.

Daniel

The Divorce Guy

My home is gone, welcome the tax?, (taxes on debt cancellation)

Under IRS regulations, if you owe a debt to someone and they cancel the debt, the cancelled debt may be taxable. This was especially frustrating to homeowners who let their house go into foreclosure only to get a 1099 for the money written off from the bank.

In 2007, Congress passed the Mortgage debt relief act of 2007. This act generally allows taxpayers to exclude income from the discharge of a debt from their primary residence (up to $2,000,000.00 - See IRS Publication 4681).

In short, if you default on your primary residence, the cancelled debt is no longer taxable. However, cancelled debt on investment property, and other debts can be unless you file for bankruptcy.

In a divorce proceeding, you need to rely on specialists to help you plan for unforeseen contingencies. Visit: http://www.thedivorceguy.com/ for more information.

Daniel