Unemployment, loss of income and
re-entering the workforce are some of the major issues causing economic
social change in American families today. The economic crisis has
aspects of family and matrimonial law. When considering a divorce, it is
important to carefully consider your options and think about you and
spouse's financial situation in its entirety. Some of the issues to
include support and maintenance, bankruptcy, the transfer of assets and
Modification of Child and Spousal Support
Given the economic times, many
seeking to modify their support obligations to their children, spouses
former partners. Downward modification applications have increased.
modification requests are also being made when support has not been
for some time, or when there has been a loss of income for the
recipient of support.
is not automatic. The law makes it
difficult to modify arrears in maintenance and almost impossible to
child support arrears. It is therefore critical that if you lose your
job or if
your income is reduced, that you make an application for modification
immediately. Documentation is necessary to show loss of income,
and good-faith attempts at replacing income.
modify a court's order of maintenance, one
must show that he or she is unable to be self-supporting, that there is a
substantial change in circumstances, or that child support has ended,
spouse with less income. For example, the courts have ruled that a
spouse's forced retirement (due to a leveraged buy-out of his employer)
constituted a substantial change in circumstances warranting a downward
modification of maintenance.
most cases where there is a separation agreement, maintenance may only
be modified upon a showing of extreme hardship.
If your spouse files for
bankruptcy, don't ignore
it; you may need to file with the bankruptcy court to protect your
rights to assets, maintenance, and child support. It is also important
or your attorney review the petition for bankruptcy and all schedules
with the petition. Bankruptcy affects all debts, whether they are
the petition or not.
Bankruptcy Court, claims for child support
are given the highest priority. Child support and maintenance are never
dischargeable; these are obligations that the court will always require
to pay. On the other hand, property division may or may not be
depending on the type of bankruptcy action.
The filing of a petition in bankruptcy does not stop family
law actions for paternity, domestic support, child custody, visitation
or domestic violence. While it also does not interfere with an action
dissolution of marriage, the division of property may be held off until
bankruptcy is settled.
Transferring Assets During Divorce
If you are thinking about getting
should know about a new requirement. The papers filed for divorce must
an automatic order which prohibits both parties from transferring funds
for the usual course of business, for customary and usual
or for paying reasonable legal fees in connection with the divorce
action. This order is binding on both parties until the divorce is
example, under such an automatic order you would
not be able to take funds out of a retirement account, take a further
against the family residence or unreasonably use credit cards (including
advances), unless you can show that it was done in the usual course of
for typical household expenses or for reasonable attorney fees.
addition, neither party can remove the other
spouse or the children of the marriage from any existing medical,
dental insurance coverage and this coverage must be maintained in full
and effect. The beneficiaries of any existing life insurance policy
changed and each party must also maintain all existing life, automobile,
homeowner's and renter's insurance in full force and effect.
Salary Bonuses & Capital Gains
Traditionally, bonuses and capital
included as income. However, since salary and bonus structures have
dramatically since the financial crisis, there are a number of
issues to consider during divorce.
instance, bonuses may now be considered as
additional income or as an asset, depending on the circumstances. A
considered income if there is a prior history of receiving bonuses; it
considered an asset if the bonus is non-recurring or fluctuates
Once considered an asset, the money is subject to property division
divorce. If the funds have been used, you are required to show it was
on reasonable expenses for the family, and that there was no other
which to pay the bills. If this is not the situation, the bonus may be
as an asset and subject to property division.
one-time cash-in of capital gains is also
subject to property division in a divorce. If the capital gains have
recurring, they may be considered income. When investigating and
assets and income in a divorce, remember in these economic times to look
and include severance packages and stock buy-outs.