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Martial Settlement Agreements – How to work things out before filing for divorce March 27, 2008

Posted by margolinlegal in Alternative Dispute Resolution (ADR), Dissolution, Domestic Partners, Legal Separation, Property Division, settlement.
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10 comments

I often have clients ask me how they can lock in an agreement with their spouse regarding how to divide up their assets in an impending divorce. Usually these clients have not yet filed for divorce. The answer is to execute a marital settlement agreement. Marital settlement agreements can also be used in the collaborative divorce process to formalize an agreement between spouses prior to finalizing their divorce.

A marital settlement agreement is a contractual agreement entered into by a husband and wife prior to their divorce. The settlement reached can be much more detailed and individualized than a judge’s ruling and can include provisions that a judge would not legally be allowed to include. The parties can work with their attorneys to make sure that their individual needs are accounted for while providing a fair division of the parties’ assets and debts.

A marital settlement agreement can also be used by parties who want to have a trial separation, but also be certain of how a divorce will proceed if they are unable to save their marriage. Clients will often want to file for a legal separation in order to preserve their rights while still being able to stay on the other spouse’s health insurance. Rather than going thorough that process, they can sign a marital settlement agreement and wait to file for divorce until the health insurance issue can be rectified.

A court is not required to approve the parties’ marital settlement agreement. A court will almost always approve the agreement provided that the agreement is fair and that both parties knew what they were agreeing to. In order for the parties to be as secure as possible that the agreement will be approved by the court they must disclose truthfully all of their financial information to the other spouse, must actually abide by the terms of the agreement during the time between signing the agreement and filing for divorce, and they must actually get divorced in a reasonable period of time. If, for instance, the parties wait many years to divorce, a court would be less likely to approve the agreement.

With the passage of the new domestic partnership legislation in Oregon, domestic partners may be able to use marital settlement agreements to formalize issues prior to dissolving their domestic partnership.

In conclusion, martial settlement agreements provide a great way for clients to divorce in an amicable and mutually beneficial manner.

Who gets to claim the child tax exemption? March 10, 2008

Posted by margolinlegal in Child Custody, Child Support, Dissolution, Myths, settlement.
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4 comments

istock_000004891591xsmall.jpg Clients often come to me asking whether they or their ex-spouse/unmarried parent of their child can claim their joint child as a dependents for tax purposes and receive the dependent tax exemption. They often think that this is a decision that is up to them and attorneys often use it as a bargaining chip.

In a divorce or custody case I am representing clients in state court. The United States Congress, through the tax code, has determined how the child/dependent tax exemption should be awarded. The supremacy clause of the United States Constitution prevents state courts from deciding issues of federal law. This means that a state court cannot properly award the exemption to a parent who otherwise would not qualify for the exemption under federal law.

The qualifying parent under IRS rules is the “custodial parent,” which is defined as “the parent having custody for the greater portion of the calendar year.” The award of “legal custody” has no effect on this definition, rather the custodial parent is “the parent with whom the child resides for a greater number of nights during the calendar year.” In cases where the child resides an equal number of overnights with each parent, the parent with the higher adjusted gross income for the calendar year is awarded the exemption.

Parties can agree to share the exemption or to have the parent that does not qualify receive the exemption. This is usually accomplished by a provision in the parties’ judgment. In order to provide the non-qualifying parent with the exemption, the qualifying parent must sign a written declaration and the declaration must be attached to the non-custodial/non-qualifying parent’s income tax return. This can be completed using IRS tax form 8332, which can be found here http://www.irs.gov/pub/irs-pdf/f8332.pdf.

A decision to allocate the dependent exemption to the non-qualifying parent should not be taken lightly. In addition to the exemption, the non-qualifying parent will also receive the child tax credit. Therefore, an agreement to deviate from IRS rules can have significant tax impacts for the qualifying parent and creat a tax windfall for the non-qualifying parent. If the agreement will be included as a provision in a judgment, the decision to do so should be carefully discussed with your attorney.

The IRS faq located at http://www.irs.gov/faqs/faq-kw46.html provides detailed information on this question.

Top 10 list: Top 10 questions to ask a divorce lawyer in the first consultation. February 10, 2008

Posted by csstephens in Child Custody, Child Support, Dissolution, Out of State, Property Division, settlement, Spousal Support, Top 10 List.
3 comments

first meeting with lawyer If you are contemplating divorce, you should consult with an experienced family law attorney. Once you set up a consultation, be prepared for the first meeting, and have a list of questions to ask the lawyer. The following questions should help you understand the divorce process, how your lawyer’s office operates, and if the lawyer is a good fit for you and your case.

  1. How experienced are you in family law? All lawyers have law degrees, but many lawyers practice in several fields other than family law. You don’t want a generalist. Family law is a specialized field, and you will likely be better served by a lawyer who focuses on family law. Make sure that most of their cases are family law cases. Ask the lawyer if they have handled cases like yours before.
  2. What steps are involved in the divorce process? Your lawyer is there to educate you and guide you through the process. Have the lawyer clearly explain the process to you, from filing the petition, negotiating temporary orders, and the trial process.
  3. How will you charge me? If you hire the lawyer, you should expect to sign a retainer agreement that covers how you will be charged. Ask about the hourly rate, and how often you will be billed. Ask if you will be charged for time spent with paralegals and other staff in the office, and at what rate. Ask what will happen if you cannot pay your bill in full every month. Ask if you can pay by credit card, and if payment plans are available.
  4. How will we communicate? Ask your lawyer if they prefer phone contact over email, and how long you should expect to wait for a return call. Is your lawyer tech savvy enough to email you draft documents as PDF files? Is your lawyer’s office set up to scan and email incoming and outgoing correspondence? Do you automatically get a copy? The last three are essential if you live out of state, or a distance from your lawyer’s office. Lawyers ta
  5. How long will the process take? Ask your lawyer about what is their estimate for how long the case will take depending on if you settle quickly, settle after protracted negotiations, or have a trial.
  6. Can you estimate the cost of my divorce? This is an important question, but a very difficult one to answer. Don’t worry if your lawyer is hesitant to answer. The cost of a divorce depends on what you ask the lawyer to do, the level of conflict between you and your spouse, and the reasonableness of your spouse and their lawyer. Many of the cost factors are outside your control.
  7. What kind of resources do you make available to clients to make the divorce process less difficult and painful? Divorce is a difficult time, and good lawyers provide information and resources to help deal with the human side of the impact. Does your lawyer provide information about the process for self education? Are they patient with you? Do they offer referrals to other professional services if you request them? Our firm provides information through this blog, and educational articles on our website. We also maintain a list of recommended reading materials, and a list of qualified counselors and therapists for those who ask.
  8. Do you recommend mediation? Ask your lawyer if your case is appropriate for mediation. Ask about private mediation, and about how often the lawyer uses private mediation with clients. Good lawyers try to settle their cases once they have analyzed the case. A lawyer that does not use private mediation or other alternative dispute resolution tools may be doing you a disservice.
  9. What fees and costs can I expect other than charges for your time? Your local county (Multnomah, Washington, Clackamas, etc.) will charge a filing fee to open a case. You will likely have to pay a process server to server your spouse with divorce papers. Your case may require experts, such as appraisers, actuaries, accountants, social workers, or psychologists. Ask your lawyer what costs to expect, what experts may be needed, and how you will be charged for these additional services.
  10. How would you predict a judge would rule on the issues in my case? While no lawyer can guarantee specific results, listen closely to the analysis behind the lawyer’s answer. Understanding the facts that would make a favorable ruling more likely will help with strategy during the case.

Tools to settle your case outside of court. February 6, 2008

Posted by csstephens in Alternative Dispute Resolution (ADR), settlement.
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handshake - mediation Good lawyers use tools other than the courtroom to get results for clients. A trial is one way to resolve your case, but not necessarily the best way. Good lawyers try to settle their cases after they have analyzed the case. A lawyer that pushes court as your only option may be doing you a disservice. The majority of contested divorces settle without a trial, and there are several tools available to assist you in the process. Once you have done your homework, and know what a court may do at trial, consider the following options:

1. Judicial Settlement Conference: A judicial settlement conference is a meeting, guided by a judge, to help parties settle a lawsuit. In some counties they are mandatory, while in others the parties must request them. One benefit is cost. The court does not charge for the settlement conference, but your lawyer will charge you for his or her time. Usually, what happens at a settlement conference is confidential to make sure parties feel good about making their best offers. What happens at the conference? Usually the judge will meet with both sides to see where there is middle ground. The judge may help the parties and lawyers by giving their opinion of what should happen in a case. If the parties reach an agreement, the court can put the settlement on the record on the spot.

2. Mediation: Mediation is a way of resolving a dispute in which an impartial person (the mediator) helps you discuss your case and, if possible, reach a voluntary agreement. The mediator helps you think about your needs, clarify your differences, and find common ground.

Oregon courts require mediation for custody and parenting time disputes. The benefit of county mediation is that it is free. Lawyers do not attend. The downside is that you likely cannot resolve your case if it involves financial or property issues. Also, your county mediation department may be overwhelmed with cases, and they may not have enough time or energy to get both parties to “yes.”

Good lawyers steer clients towards private mediator, if appropriate for the case. In private mediation, the parties jointly hire an expert to help resolve a dispute. The expert is usually a retired judge or experienced divorce lawyer. Usually the lawyers attend to provide guidance. The parties pay the mediator for his or her services (the best mediators in Oregon charge $250-$300 per hour) and pay for their lawyer’s time. While expensive, if you reach a resolution, it is generally less expensive and less stressful than having a trial. Unlike court, you have the opportunity to reach a flexible and creative solution to your dispute. Most important, the result is voluntary, rather than imposed on you by a judge you just met.

      Make sure to talk to your lawyer about your dispute resolution options other than the courtroom. While a courtroom may be necessary, you have other options. Talk about these options with your lawyer to see if they are right for you.

      Collaborative Divorce January 24, 2008

      Posted by margolinlegal in Dissolution, Domestic Partners, Legal Developments, Property Division, settlement, Spousal Support.
      4 comments

      Having a trial is a way, but not the only way to resolve your case. There are many tools available for resolving your case other than a trial. Good family law lawyers are problem solvers, and the good ones recommend that their clients try to resolve their disputes outside the courtroom. Many jurisdictions have mandatory mediation (without lawyers) for parenting time and custody issues. Many good lawyers recommend their clients use private (for a fee) attorney guided mediation for property and custody and parenting time issues. Many participate in judicial settlement conferences where a judge attempts to guide the parties towards a cooperative resolution. If successful, the benefit of these tools to the client is usually lower cost, less conflict, and an agreement they chose, rather than having a judge tell them what the result is.

      Some specially trained lawyers are using a new process called “Collaborative Divorce” designed to keep clients out of the courthouse from the beginning. Collaborative Divorce is a non-litigious party based settlement process in which a husband and wife or domestic partners work together to dissolve their relationship. The process can result in less cost, stress and judicial involvement than a litigated divorce or domestic partnership dissolution. The main idea is for the parties to work together to end their relationship in a manner which allows for each party to be self-sustaining financially and that serves the best interest of their child.

      In a Collaborative Divorce case, the parties use a team of professionals to work on specific areas of their case. For example, if a child is involved, then the parties would have a child specialist on their team. In all cases, a financial specialist trained specifically in divorce finance and a mental health practitioner will be used. One benefit of the collaborative divorce process is that it can produce much more creative methods of property division and spousal/child support than a judge in a litigated case would order.

      At the beginning of the case, the parties sign a collaborative practice agreement or participation agreement, which outlines the essential principles of the collaborative process. The agreement limits the parties’ attorney-client confidentiality and sets forth the rule that if the collaborative process is unsuccessful, then all of the professionals involved in the case, including both parties’ lawyers, will no longer work on the case. In addition, any materials or information produced in the process will not be admissible in court.

      This process is very popular in Canada, Australia, and in some states in the US. It has not taken off yet in Oregon at a substantial level. There are, however, a number of collaboratively trained lawyers and team professionals in the Portland area. This is a growing field, and something to seriously consider if both you and your spouse wish to avoid the expense, stress, and frustration of traditional, adversarial litigation. Our office maintains a list of family law lawyers trained in the collaborative process.

      Divorce Myths: Everything must go before we are divorced! January 20, 2008

      Posted by csstephens in Myths, Property Division, settlement.
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      for saleA surprisingly common “divorce myth” we hear in our practice is that division of property must happen before the couple is divorced. There is no such rule! The court’s power to divide property after a divorce is defined in ORS 107.105(1)(f). Whenever a court finalizes a divorce, separation, or annulment action, the court can provide for the division of real property and personal property as is “just and proper in all the circumstances.” For example, the divorce judgment may explain how the parties are to divide the personal property after the divorce, or provide rules about how the parties will sell real property after the divorce. Once you have an agreement (or court ruling) on division of your assets, you can divorce first and divide and sell later.

      Top 10 list: Top 10 things to NOT do during your divorce. December 14, 2007

      Posted by csstephens in Dissolution, Property Division, settlement, Top 10 List.
      6 comments

      Divorce is not easy. There are many pitfalls and traps awaiting parties that have not educated themselves about the process. People often make bad decisions under stress, or without the guidance of an experienced lawyer. Don’t be one of them. Divorce law isn’t rocket science, but it isn’t always intuitive. Avoid the following 10 divorce pitfalls to get a better result.

      During your divorce, you should NOT:

      1. Lie to your lawyer: We are here to help you. Your communication with us is privileged, meaning we can’t tell others about it, except in certain child abuse scenarios. The more we know, the more we can help. We need to know everything, the embarrassing, the ugly, and the secret. If you have a drug, alcohol, or gambling problem, tell us. You have two options: (1) Disclose and likely hear from your lawyer that your secret or problem is irrelevant to the court process, or (2) Fail to disclose and have your case hurt at trial because the other lawyer knows facts you haven’t told your lawyer.

      2. Lie to the court: If you have a trial, the result is directly affected by your credibility. Judges are generally experts at determining who is telling the truth, and who is lying. Not only is lying to the court a crime, but your lawyer may have a duty to stop the proceeding and tell the court if he or she knows you are misrepresenting facts! If you have areas of your case that are sensitive, work with your lawyer on what you are going to say, but don’t misrepresent.

      3. Involve the kids in the process: If your case involves a custody or parenting time dispute, nothing will draw the wrath of the court faster than involving your kids in the dispute. Don’t talk to them about the case. Don’t use them as pawns in the battle against your spouse. Don’t use them as your therapist, or treat them as your peers. Don’t put your spouse down in front of the kids. You are not only harming your case, you are harming your children.

      4. Hide or fail to produce documents: You have an absolute right to see your spouse’s financial documents. Your spouse has an absolute right to see your financial documents. I have seen many cases that could have been simple turn complex and expensive when someone decides to not voluntarily produce records. The court can force you to produce records, and order that you pay your spouse’s lawyer fees incurred in getting the records. Good clients and good lawyers produce documents quickly and voluntarily. I had a case where we asked for some email records from the other side. They did not produce them, and when we filed a motion to compel their production, they tried to tell the court that they had been destroyed. The stunt seriously impacted the opposing lawyer’s credibility with the court.

      5. Refuse to cooperate with a court appointed expert: In divorce and custody cases, experts called “custody evaluators” are routinely appointed to gather information about a family and make a recommendation regarding an appropriate parenting plan. If one is appointed in your case, cooperate. Be on time for appointments. Treat the expert with appropriate respect. Ignoring the requests of the evaluator can seriously harm your position and credibility with the court. An evaluator will likely make negative assumptions about you if you cannot comply with a court’s order to cooperate.

      6. Settle without analyzing your case: Divorce can be unpleasant and emotionally painful. One reaction is to try to get it over quickly. Do not give into the urge to be done with the case before you have a full understanding of the assets and what a fair distribution looks like. You don’t want to be in a position where you are contemplating settlement and your spouse knows more about the assets than you. Prepare and go over a proposed distribution of assets and liabilities with your lawyer. Make sure you know the nature and extent of the assets, and get additional discovery if you don’t. Do not settle prematurely, before you know what is fair.

      7. Fail to try to resolve the case outside of court: Don’t settle early without analysis, but also don’t fail to try to settle. Good lawyers and reasonable people settle most divorce cases without a trial. Many clients benefit from mediation, either through the county courthouse or through a private mediator. Our experience has been that many very difficult cases settle in mediation with the guidance of a trained expert mediator. You should always consult with your lawyer during the process to make sure you are getting a fair result. Settling also means you choose the outcome rather than have a judge impose an outcome on you. Parties that settle are generally happier long term, and have less ongoing conflict. Even if the other side is unreasonable, you should still make an offer to create a record of your position.

      8. Take out your stress in unhealthy ways: This is the wrong time to up the drinking or other unhealthy behavior. Expect stress from the conflict and plan for it. Take out your stress in healthy ways, like at the gym, sports, or in talking to friends or a counselor. Don’t take it out on your children, or your body through unhealthy behaviors.

      9. Be economically irrational in negotiations: At some point in every case it costs more to continue arguing than what is at stake. Approach your case with a business like mind. Are you really winning if you spend $1000 on lawyers to argue over a $50 lamp? Some (bad) lawyers insist on arguing about every point, without regard to cost. Every issue is a new battle front. A request to resolve one issue results in two more contested issues. In our opinion, these lawyers don’t serve their clients well. Pick your battles. If it costs $1000 to argue over something you can replace at Target for $20, buy a new one, and focus on what is really important.

      10. Be your own lawyer if your case is contested and your spouse is represented: Many judges dislike unrepresented parties. Even experienced divorce lawyers hire experienced divorce lawyers for an objective opinion. Many unrepresented people who think they have a great case find out otherwise after a judge rules against them because they can’t tell the judge everything they want to because of the rules of evidence. If you disagree over property or custody, and your spouse has a lawyer, seek representation.

      The easy divorce – the “Settlement Package.” December 8, 2007

      Posted by csstephens in Dissolution, settlement.
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      Divorce can be a long, emotionally difficult and challenging process. It can also be relatively easy if you have a complete understanding of your finances, have a semi-cooperative spouse, and are willing to invest some money and effort early on. Document drafting usually occurs twice in a case, first when you file for divorce (the petition and other filing documents to start the case), and again when the case is complete (the general judgment and other documents to finalize the case). Usually many months separate the filing of the petition and the completion of the case.

      It doesn’t have to be that way. We have had good luck wrapping up some cases quickly by preparing a “settlement package” that contains the filing documents AND a proposed final judgment. If you have a full understanding and knowledge of the marital finances, and you anticipate agreement on property and child issues, this tool may work for you. Your spouse gets the package, and if they agree, all they have to do is sign. The incentive for your spouse to sign is that YOU have done all the work. The spouse may only need to consult with an attorney, rather than retain one. (We blogged about the difference in an earlier post) While it doesn’t always work, and it is not appropriate for all cases, some potentially lengthy cases can settle quickly with the technique. Some lawyers, including our office, will prepare a settlement package for a flat or fixed fee. If you have a full understanding of your finances, and you and your spouse are close, ask your lawyer about the wisdom of serving a proposed general judgment along with the petition in a “settlement package.”