Blog post

DLM blog post – What not to do during a divorce! (2022 Edition) Part II – Financial | Burns & Levinson LLP

In part two of this two-part series, you’ll learn about the financial pitfalls to avoid in the divorce process. An experienced divorce attorney can guide you to ensure financial decisions don’t cost you credibility, time and money. Always consult your lawyer before taking any action that would have a significant financial impact, and consider these 10 tips on financial “what not to do”.

1. Remember to disclose all your assets, income and liabilities, and don’t try to hide them.

You must disclose all assets, income, and liabilities to your divorce attorney and to the court. Not disclosing them, and especially deliberately trying to hide them, can damage your credibility in court and lead to increased legal costs, time and embarrassment.

2. Do not give assets to friends or family members.

Once you file a divorce complaint or receive a divorce complaint, Supplementary Estates and Family Court Rule 411 (“Rule 411”) comes into effect and prohibits you from gifting assets to third. If you donate property, the court may find you in contempt or you may receive less marital property in the divorce to account for these gifts. Even if the divorce lawsuit has not yet been filed, you should exercise caution in giving gifts if you are considering divorce, discussing the divorce with your spouse and/or a lawyer, or engaging in mediation of divorce, as the court may view such gifts unfavorably. Giving to third parties is not likely to result in less income for your spouse and may damage your credibility, increase legal costs and result in a worse outcome for you.

3. Do not sell assets, especially assets that your spouse may claim (including jewelry, collections, personal items, etc.).

Although Rule 411 allows you to sell assets if you need funds to pay your reasonable living expenses or legal fees, you should avoid selling assets if possible. Use funds in bank and/or investment accounts, or consider loans that won’t burden your spouse’s credit rather than selling assets. This is especially true of assets that your spouse believes hold special meaning or sentimental value to them. If you sell the Vermeer that your spouse inherited from his great-grandmother to pay your bills, your spouse may be so angry that it becomes impossible to settle your divorce out of court, resulting in an increase in court costs as well as significant delays in getting divorced.

4. Do not assign interests in assets to friends or family members.

This is also a violation of Rule 411 and may result in the court finding you in contempt or awarding you less marital property overall. Assigning interests in assets to third parties will not result in a reduction for your spouse and could harm you in divorce proceedings.

5. Don’t incur debts that strain your spouse’s credit.

This is another violation of Rule 411. If you must incur debt to pay expenses, do not incur any debt that could strain your spouse’s credit – such as a home equity loan – but ask yourself if you could borrow money from family members. , or if needed, a 401(k) or life insurance policy in your single name.

6. Do not change the beneficiaries of life insurance policies or retirement accounts.

This is another violation of Rule 411. Your first instinct may be to change account beneficiaries to cut off your spouse in any way possible. This is unwise and again may result in the court finding you in contempt. Once divorced, you can easily change the beneficiaries of life insurance policies and retirement accounts.

7. Do not remove your spouse or children from health insurance policy coverage.

Again, this violates Rule 411. This includes removing your spouse or children from medical, dental, and vision insurance policies. Some divorced spouses fear missing their employer’s open enrollment period and need to keep their spouse insured longer than necessary, and decide to remove the spouse from medical insurance policies. Finalizing your divorce is a qualifying life event for insurance enrollment purposes. So, once you receive the divorce decree, you usually have thirty days to make changes to insurance policies.

8. Don’t make extravagant or unusual purchases.

Extravagant purchases can damage your credibility in court because such purchases look like an attempt to reduce marital property that can be divided. Many large personal property purchases also reduce marital assets as they lose value, such as a new car that loses significant value as soon as you take it out of the lot. Wait and buy that Lamborghini after your divorce.

9. Don’t quit your job without first discussing it with your divorce lawyer.

You may think that quitting your job will cause you to pay less alimony and/or alimony to your spouse or receive more alimony from your spouse, but that may not be the case. The court can, and probably will, award you income if you voluntarily quit your job without moving quickly to a new position. This means that the court will order alimony and/or child support as if you had not quit your job, using your income from your previous job as the income to calculate the alimony. In other words, you could end up paying the same child support as if you hadn’t quit your job, but without the income from that job to pay child support. It is also inadvisable to quit your job and take up a much lower paying job, as income may also be attributed to you in this circumstance, in the absence of a good faith reason for the change.

10. Don’t forget to change your estate plan.

Although Rule 411 prohibits changing life insurance and retirement account beneficiary designations, you can and should change your estate plan once you file for divorce or receive a divorce complaint. You cannot completely disinherit your spouse, but you can reduce what he or she will receive from your estate in the event of your death. Although unlikely, if you die before you divorce, your spouse will receive their share of your estate under your prior estate plan, or if you do not have an estate plan, they may receive significant assets as share ab intestate of your domain. You should consult with an experienced estate planning attorney to determine an optimal estate plan to put in place until the divorce is final. And once the divorce is final, you should modify your estate plan again, because you can make an estate plan that leaves nothing to your ex-spouse if you wish.


Source link