Category: Economics of Divorce

Topics of interest impacting economic matters in divorce

Writing a $974,790,317.77 check and moving on in divorce

Sometimes keeping things in perspective is half of the battle.

Recently, a couple from the midwest (Harold and Sue Ann) were going through a divorce. Harold is a billionaire, but his fortune is largely tied to the price of oil. Jonathan C. Noble, Esq.The price of oil can and does fluctuate . Therefore the value of their marital assets can and do fluctuate.

 

The court valued Harold and Sue Ann’s marital estate at a little over two billion dollars. The Oklahoma divorce court awarded Sue Ann almost half. In an effort to end the divorce proceedings, Harold decided to write a check to Sue Ann for $974,790,317.77. You may have already seen a copy of the widely publicized check.

Here is a link from Reuters with the story and an image of Harold’s handwritten check to Sue Ann:

http://www.reuters.com/article/2015/01/09/us-hamm-divorce-wife-idUSKBN0KH2BK20150109

Sue Ann allegedly vowed to appeal the award, claiming Harold’s company was worth much more. A few days later, she cashed the check, pretty much ending her rights on appeal regarding the valuation and distribution of marital assets.

Why is this story important? 

This story is important because this couple could have spent more money on lawyers fighting over millions (or billions) of dollars, with absolutely no guarantee of a positive outcome for either party. I imagine Harold is a very smart guy. Instead of fighting for an indeterminate amount of time with no guarantee that either party would achieve a better outcome, he simply wrote a check that “got the deal done”.  Harold simply wrote a check to Sue Ann for $974,790,317.77. She deposited the check a few days later. Here below is a link to the story from CBS news:

http://www.cbsnews.com/news/harold-hamms-ex-wife-cashes-billion-dollar-divorce-check/

Harold appeared on CNBC soon after Sue Ann cashed the check. Here is the link to his very short interview:

http://www.cnbc.com/id/102462914

Notice Harold’s mindset. During the CNBC interview, he said his divorce is “in the rearview mirror, movin’ on”.

While the case may still be pending on appeal, many legal analysts believe that Sue Ann faces an uphill battle to overturn the award on appeal.

For some going through divorce, the story of Harold and Sue Ann should act as a reminder that setting smart goals (i.e. putting the divorce in the rearview and movin’ on) is often an important part of a good overall strategy.

 

How long does it take to get divorced in Pennsylvania ? – It depends

How long does it take to get divorced in Pennsylvania? Unfortunately, there are no easy or common answers. It depends upon a number of factors. Perhaps as much as than any other area of law, divorce and family law cases are factually different from one another. Here below is a non-exhaustive and very basic, extremely short list of factors and reasons that commonly impact the total elapsed time between filing a divorce complaint in Pennsylvania, to the entry of a divorce decree.

Jonathan C. Noble, Esq.
Jonathan C. Noble, Esq.

a) Filing for a Mutual Consent, No Fault Divorce – If your circumstances allow, Pennsylvania has a 90 day waiting period from the commencement of the divorce action for uncontested (mutual consent), no fault divorce, without any other economic issues. Economic issues between the parties can slow the divorce process down. The 90 day waiting period acts as a “cooling off” period. Depending on the county where you file, the particular judge, the potential backlog, etc., the time it takes the court to enter a divorce decree is usually 4 to 6 months for a mutual consent, no fault divorce without economic issues. Note: Do not plan to get remarried until you have a divorce decree in hand. Things can and do get delayed.

b) Filing for divorce under Irretrievable Breakdown of the marriage section of the divorce code now requires that the parties live separate and apart for at least one year. What is an “irretrievable breakdown”? Pennsylvania law defines it as “estrangement due to marital difficulties with no reasonable prospect of reconciliation”. If this sounds like your situation, you will need to live separate and apart for at least two years and the defendant agrees that the marriage is over. Note: you certainly can, and some people do “live separate and apart” under the same roof for all or part of the one year waiting period while they wait to obtain money to purchase a new home, or for other reasons. If one of the parties wants to try to reconcile, the court can order up to three counseling sessions. Note: In 2016 the Pennsylvania law reduced the “living separate and apart” requirement from two years to one year.

c) Extensive marital assets that need to be valued prior to being divided can slow down your divorce. Homes, businesses, pension plans, retirement plans, stock options, artwork, etc., etc. In some cases the parties disagree on the method used to value the asset and this can cause significant additional expense and delay.

d) Marital assets that for one reason or another are “missing” or misappropriated.

e) Backlog in the system, or one side is not adequately prepared to move forward when they should to be. This may include one party having an attorney while the other is without an attorney (known as a pro se party).

f) One of the parties cannot be located.

g) If the parties agree to use binding arbitration, the collaborative divorce process or mediation to settle economic issues they cannot otherwise settle, this can usually move the process along much more quickly than traditional litigation. Drawback:  alternate dispute resolution methods can still be expensive, but not as expensive as litigation.

h) One of the parties truly cannot see the forest from the trees and decides to “scorch the earth” (sometimes with cooperation from their counsel or on advice from others) on every point, no matter how minor. This may include refusing to negotiate a reasonable  marital settlement agreement, demanding all aspects of the case be litigated, being unresponsive to discovery requests, deciding that “having their day in court” must occur despite great expense and lack of any guaranteed result.

i) One of the parties mistakenly believes that seeking revenge via the divorce process is somehow better than getting on with their life. This can be a mental health issue that may be helped with coaching, counseling and the like.

These are just a few of the many issues that can arise and impact how long your divorce process takes. As you and your attorney navigate the legal landscape during a Pennsylvania divorce, stay focused on the end game. Less conflict means things move more quickly and usually with less cost to the parties. A skilled family law attorney will be able to keep your matter moving swiftly to a successful conclusion, while keeping you informed of the process.

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Driving out costs of divorce, part 2 – low cost PA divorce

Low Cost Pennsylvania Divorce – Myth or Reality ?

Jonathan C. Noble, Esq.
Jonathan C. Noble, Esq.

Several people have asked me if it is possible to get divorced for under $500.00 in Pennsylvania, and without using a lawyer. Technically, it may be possible, but it may be difficult, time consuming, and you may be giving up rights that you don’t know about.

In very simple terms, if both parties agree to divorce each other and sign the required paperwork, and if there are absolutely no disagreements regarding the valuation or division of assets, division of liabilities, or disagreements of any nature regarding pretty much anything else, if neither party is seeking support of any kind (either during the divorce process or after it is over), and the parties are civil to each other and can properly draft, sign and file the proper paperwork, it is possible to get divorced in Pennsylvania for minimal costs and fees. Every Pennsylvania county sets it’s own filing  fees for divorce. Depending upon the county you file for divorce and the number of “counts” or issues in your divorce complaint, your filing fees will vary widely.

Most counties have “local rules” that parties (including attorneys) must follow when filing for divorce on behalf of their clients. Many county court websites are full of information regarding getting divorced in their county. Some firms even advertise a low cost “divorce kit” for the do-it-yourself (or pro se) parties.  If what I just described sounds like your situation, then you should consider exploring your options carefully. You should still consider consulting a family law attorney, if only for a limited purpose, because you may not realize you are relinquishing rights you may not even know existed.  In addition, the laws of the Commonwealth of Pennsylvania apply to each of the 67 counties. However, local practice and procedure, especially in family law matters can vary from county to county. Working with a competent family law attorney who is familiar with your particular county can help demystify the process for you.

NOTE: Once a final divorce decree is entered, it is extremely difficult to revisit (opening the divorce decree) and attempt to assert the rights that you had previously waived. In other words, if you file for divorce (with or without legal counsel) and you obtain a divorce decree, absent very limited circumstances, you can’t go back and claim you didn’t get a fair deal or you didn’t understand the consequences of what you were doing at the time.

Here below are other simple ways that you can help drive costs out of the divorce process if you do retain legal counsel.

Getting organized – the earlier the better 

If you hire a family law attorney, depending on your particular case, there is a good chance they will request many financial documents and statements. You may need to go online and print all of your banking and financial records, including past statements from years ago. You do not want your lawyer, or his paralegal and/or secretary to do this for you if you can take the time to do it yourself. Your attorney will need to carefully review the documents you produce. Make copies. Place them chronologically in binders or files. Keep personal copies (or scan them if you have a scanner) in the event your attorney has a question, he or she can contact you and you will both have a copy for reference.

Complying with discovery requests in a timely fashion

In most divorces, the parties will conduct discovery. Your attorney will be asked to provide the other side with certain documents you are asked to produce. Providing the requested documents in a timely fashion helps move the process along more quickly without unnecessary costs and delays.  Filing motions to compel production of the necessary documents wastes time and money, if it can be avoided. The “missing” documents are going to be obtained eventually anyway. Sometimes when one party is diligent and moves quickly regarding providing requested information, it can help set the pace to move the matter to a successful conclusion. I realize you can only control your actions and you can’t control the other side.  All things being equal, the sooner you can move the divorce process to a successful conclusion, the less costly it will be.

Always remember – do not let emotion, and lack of focus or lack of logic drive your actions. You do not want to end up losing control of your divorce process. Your attorney works for you, and the best outcomes are usually the product of collaborating closely with your attorney. Get your questions answered. Stay informed. It will reduce your stress and the fear that sometimes accompanies the unknown.
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Providing money to your child for the down payment of a house – is it a gift or a loan?

It is somewhat common for a parent to provide funds to their child for use as a down payment on a marital home. The amount is often substantial. Depending on the facts surrounding the transfer of funds, it may be a good idea to document whether the funds are a gift or whether the funds are a loan.

Jonathan C. Noble, Esq.
Providing your married children with funds to purchase a home is fairly common. It may be helpful to think about whether the funds will be viewed as a gift or viewed as a loan in the event your child is faced with divorce.

Why is this important?

If the funds are a gift to your child, and the funds are not traceable and/or commingled with marital funds, then used to purchase a marital residence, the funds become a marital asset, subject to equitable distribution in the event of a divorce. This is usually the position of the spouse of the donee. If your position is that the down payment funds were given as a gift, it would be helpful to produce the gift letter and perhaps a copy of the check that the donor signed.

If the funds are a loan, the loan must be repaid. If the house is sold due to divorce, or the title of the house is transferred due to divorce, you may be entitled to have the loan repaid from the proceeds of the sale or transfer. This is usually the position of the child of the creditor parent making the loan. If your position is that the funds were a loan, and therefore must be repaid, it would be helpful to produce an amortization or payment schedule, a promissory note showing the rate of interest charged, and proof of at least some repayment.

This post is simply to have you think about two of the many options you may have when providing a significant amount of funds to your married children.

No two family law matters are exactly alike. Nothing on this family law blog should be considered or used as legal advice. Nothing can replace consulting an attorney licensed in your jurisdiction, regarding your particular family law matter.

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Prenuptial Agreements – an ounce of prevention may be worth ten pounds of cure

by Jonathan C. Noble, Esq.

Prenuptial agreements in Pennsylvania can save tens of thousands of dollars in costs and fees in the event of a divorce.  It can also save your business, limit your exposure to your spouse’s non-marital debts, limit possible alimony payments, and safeguard other valuable assets.

A prenuptial agreement (also known as a premarital or an antemarital agreement) is a legally binding agreement between two people who are planning to marry. The goal of this post is simply to have you think about some of the advantages of using a prenuptial agreement.

While every situation is different, nobody goes into a marriage hoping the marriage will end. Unfortunately, many marriages do end. Some end amicably, with mutual respect, and without much disagreement. Many others, not so much. While bringing up the subject of entering into a prenuptial agreement can be stressful in certain situations, it is certainly worth speaking to a family law practitioner about how a prenuptial agreement can help safeguard you, safeguard your business, safeguard your assets, and safeguard your children from a prior marriage in the event your marriage ends.

Jonathan C. Noble, Esq.
While the subject of entering into a prenuptial agreement can be a little stressful in certain situations, it is certainly a good idea to consider. Consult an attorney to help you determine if a prenuptial agreement makes sense for you.

A prenuptial agreement can help streamline property distribution in the event of a divorce.

In Pennsylvania, if you divorce, your assets are categorized as either marital or non-marital property. Marital assets need to be valued, so they may be divided properly in the event of a divorce.

Marital property is broadly defined as property acquired during the marriage, or the increase in value (during the marriage)  of non-marital property. For example,  you may own rental property prior to getting married. Any increase in value of the rental property during the course of the marriage is considered marital property and subject to equitable distribution should you divorce.

Non-marital property is broadly defined as property acquired before the marriage, or property acquired by gift or inheritance. This is important: Non-marital property also includes anything normally considered marital property that you and your (soon-to-be) spouse agree to designate as non-marital property in a properly drafted and executed prenuptial agreement. That could include a business you own and have built for many years.

There are many reasons why a prenuptial agreement makes perfect sense for many people. Both women and men often initiate the use of a prenuptial agreement upon contemplating a second (or third) marriage. One of the many benefits of having a prenuptial agreement is that a prenuptial agreement can serve to protect the interests of children from a previous marriage.

Enforceability of Prenuptial Agreements in Pennsylvania

In broad terms, Pennsylvania courts have generally treated prenuptial agreements using contract law principles. Normally, a prenuptial agreement must be executed voluntarily and with a full and fair disclosure of a party’s assets and liabilities.  (If a party voluntarily waives the full and fair disclosure of assets and liabilities requirement in writing, a prenuptial agreement may still be upheld in Pennsylvania). Full and fair does not mean “exact” in the context of a prenuptial agreement.

There are several very important steps to making sure your prenuptial agreement is both enforceable in Pennsylvania and/or decided under Pennsylvania law should you move to another state during the course of your marriage or move to another state after you have separated. You should also leave plenty of time before the wedding to finalize and properly execute a prenuptial agreement. One rule of thumb is to try to properly handle the prenuptial agreement before the wedding invitations go out. Both parties should have time to examine the contents and consult with counsel of their choosing if they so desire.

If getting married is in your future, you should seriously consider consulting with a family law attorney who can guide you through the process of using a prenuptial agreement in an effort to protect your assets in the event your marriage ends.

Similar to purchasing insurance, you hope to never need to use a prenuptial agreement, but if you do, it could be well worth your investment.

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Finding and choosing the right family law attorney – 4 points to consider

Choosing the right attorney for you is one of the most important elements in any family law matter. Here are a few things you may wish to consider:

Jonathan C. Noble, Esq.
Jonathan C. Noble, Esq.

#1) Depending on the nature of your case, you must have a very good working relationship with your family law attorney. A good working relationship with your attorney may help you achieve a better result, and do so more quickly. Thorough and honest two-way attorney-client communication is one essential element for getting good results, and moving on. 

There is no way around it. You will likely spend considerable time communicating with your family law attorney. If you don’t get a good feeling during your initial meeting, speak to another attorney. If you are not comfortable, you are certainly entitled to, and frankly should, meet with another attorney before hiring anyone. You are free to consult with as many attorneys as you like prior to hiring one.

Consulting with an attorney to see if there is a good fit does not mean you must hire the attorney. Some attorneys may charge a reduced fee for an initial consultation. Some attorneys offer a free initial consultation without really getting to know the details of your family law matter. Never feel pressured to hire an attorney. Choosing an attorney is an important decision that must be made with care.

Consider this: if you needed major surgery, you would probably get a second or even a third opinion. Going through a divorce or other family law issue is an important life event. Search vigorously, choose wisely.

#2) Every family law matter is somewhat unique. It is important to have a plan of action and set goals early in the process. You do not want to get aboard a runaway litigation train. 

Nobody ever goes into a marriage expecting to need to find and hire a divorce lawyer. It is normal to be confused. It is normal to have your emotions turned upside down. You will have many questions along the way. This is perfectly normal. Your lawyer should guide you through the sometimes foggy legal landscape. Relying on advice from a friend or loved one is usually not a substitute for hiring an attorney.

Many people are ambivalent about getting a lawyer involved. It is easy to understand why. I do not take it personally. Unfortunately, if a divorce or other family law matter seems imminent, the longer you wait, the messier things may become. In the context of a divorce, preparation is important. Setting an early course of action, guided by a client’s realistic goals, is very often a successful formula. A good attorney will be pragmatic, will be honest with you, will help you keep things in perspective, and will keep the process moving forward while zealously advocating for your interests. All while keeping you informed.

#3) Make sure you and your lawyer see the forest from the trees. You must try to work toward the same goals from day one.  Making the process more difficult than it needs to be is almost always counterproductive. 

In a divorce action, be sure you understand all of your options. Divorce Mediation, Collaboration, Binding Arbitration, Litigation, etc.

Pick your battles wisely. As I mentioned in another post, the more you and your (soon to be) ex-spouse can agree on, without unnecessary conflict, the less financially and emotionally draining the divorce process will be. Burning the earth for the sake of winning a relatively unimportant battle can be counterproductive, while increasing your costs. Sometimes a fine line exists between zealous representation to protect a client’s interests and acting like a junk yard dog.  A skilled family law attorney need not act like a junk yard dog to get excellent results.

 #4) Ask questions. Stay informed. Get educated about the process. It will help you overcome fear and move forward.

Some counties in Pennsylvania and New Jersey have a free law library. If you live near a law school, perhaps you can pay a nominal fee to use their law library. Some law schools have a family law clinic.  Many courthouses have a law library for public use for a nominal fee or free. Sometimes being well-informed relieves stress, allows for clearer thinking, and helps move your legal matter to a successful conclusion.

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