Post Divorce Economics

Question 1

What are the steps toequitable distribution?

Answer 1

STEP 1

Divide assets into 3 categories (on exam make 3 columns):

(1) Spouse 1’s; AND
(2) Spouse 2’sseparate property
(3) Marital property subject to distribution

STEP 2

(i) Give S-1 and S-2 their separate property
(ii) Exercise equitable discretion to divide up the marital property subject to distribution

Question 2

How is the separate property of each spouse determined?

Answer 2

Separate property = Anything owned PRIOR to marriage, like…

- Bequests received by either in only his/her name
- Inheritance
- Property they agree to treat as separate (in written agreement)
- Personal injury compensation (designed to compensate for pain/suffering)
- Passive appreciation on the above property (change in value due to time or market place fluctuation)									

BUT appreciation due to active participation or management by spouse in adding value is a MARITAL asset (Ex – increase in value of a separate property during the marriage due to the contribution of the other spouse as homemaker & parent)

Question 3

How ismarital property determined?

Answer 3

Marital property subject to distribution, includes…

All property acquired during marriage REGARDLESSof how asset titled & who works

Includes professional licenses/degrees earned during marriage (but advanced earnings cannot be double counted for alimony purposes)

All businesses, salaries, stock options, lottery winnings, pension rights, gifts from spouse

RULE: when in doubt, it’s marital

Question 4

How does a court determine how to distributemarital assets?

Answer 4

Court may consider any relevant factor, EXCEPT marital fault, UNLESS such fault is egregious (shocks the conscience)

Courts divide marital property equitably & are guided by statutory factors (age, health insurance coverage, job skills, custodian of children, etc.) but there is no exact percentage & the court has discretion

Can order in-kind transfer (item by item) ORlump sum (cash award payment) to effectuate distribution

Question 5

What are the types of maintenance?

Answer 5

Aka alimony

1) Temporary maintenance- ordered while case is pending to meet temporary needs of parties (designed to preserve the status quo)

On essay, say this if the party is worried about supporting themselves during a claim

2) Final maintenance – post-divorce, continuous payment

No automatic entitlement—based on reasonable needs of recipient

Question 6

In assessing maintenance amount, what factors does a court look to?

Answer 6

Court may consider ANY factor it deems relevant, including…

- Nature & degree of fault;
- Age and health of parties;
- Skills, earning capacity, time needed to gain skills;
- Whether spouse cares for the children or another family member;
- Standard of living while married;
- Duration of the marriage;
- The division of property already

NOTE:the economically stronger party generally pays the weaker party’s counsel fees in an action for maintenance

Question 7

How are maintenance orders enforced, modified OR terminated?

Answer 7

Enforcement: if spouse violates the order for maintenance, the court can…

- Seize & sell property
- Attach spouse's wages
- Seize drivers & professional licenses
- Hold spouse in contempt of court (jail time)

Modification: any party can move for a modification (up or down)

Modification permissible upon showing of change in circumstances (payer got laid off, injured, recently graduated school & can now get job, etc)

If pursuant to a separation agreement, extreme hardship must be shown

Prospective modification only – past due payments are STILL owed

Encourages people to get to court early upon a change in circumstances

Termination: Normally terminates AUTOMATICALLY on death of either party

Remarriage (or cohabitation as if marriage) of recipient spouse is grounds for termination AUTOMATICALLY

NOTE: cohabitation without marriage not enough to terminate unless cohabatitor represents to the world that he’s married.

NOTE: YOU CAN contract around these automatic terminations in a separation agreement