Quick, claim the quitclaim

I took a call from a lady who has called several times over the past two years for help on various things. Today she was asking about a quitclaim deed. Some call this mistakenly a “quick claim” deed because they think it is quick. Actually, it is a “quitclaim” or “quit-claim” deed because the grantor is quitting their claim to the property. They are merely relinquishing any right or interest they may have in favor of the other owner.

In one sense, no transfer occurs in a quitclaim deed and so, it can only be used when the other party has an interest already. My caller, though, wanted her soon to be ex-husband to give his interest to their daughter. I had to explain that this would not work for a quitclaim deed because an actual transfer was occurring. This meant likely transfer taxes would be involved and a different kind of ownership. Instead of joint ownership with the remainder in fee simple to the survivor – the typical husband and wife ownership – it would be a tenancy in common.

Joint ownership, if it were to be imagined, means both parties own 100% of the property concurrently and it would take both parties to sell or transfer the property. Tenancy in common, in contrast,  allots a percentage of ownership to each party and each party can convey their percentage of interest or even a portion thereof to another party or parties.

Despite the implication made by my title, there is no “good” versus “bad” ownership type here. I just thought the title was catchy. However, there are implications and it is important for family law practitioners handling divorce cases to have a rudimentary understanding of real property laws and issues.

What the caller wanted to be done could be done by a different deed; but not with a quitclaim deed. Furthermore, such a transfer would technically trigger a default of the mortgage allowing the lender, if they so chose, to foreclose. The likelihood of this actually happening is an entirely different matter. If it were me personally doing this, I would not be terribly concerned about this eventuality. The transfer would, of course, be subject to the mortgage.

Posted in Distribution of property, Family Law, Real Estate law | Tagged , , , , , , , , , | Leave a comment

Blended families and estate planning

I met with a couple today who reminded me of the importance of at least doing a basic will for blended families. The father wanted to make sure his step-children were treated as though born naturally of him. This would not happen under intestate laws (laws governing how stuff is divided absent a will). He wanted his estate to reflect his heart towards his children. So, I was able to do a basic will for him to make sure that happened.

If you have a blended family be sure to talk to a lawyer who understands these issues to make sure your family is protected the way you want if you were to pass away.

Posted in Distribution of property, Estate planning, Family Law | Leave a comment

Hidden Issues in Child Support 1

An opposing attorney may tell you, if you are not represented by a lawyer in a divorce action, that child support is very cut and dried and the amount they are proposing is determined by statute. This is a partially true statement. It is determined by statute and in the realm of things, it is indeed cut and dried in comparison to other legal matters. However, there are areas that factor into child support that are not addressed specifically in statute.

For example, the Kentucky Revised Statutes allow for a judge to impute income to a divorcing husband or wife in setting the amount to be paid, but it does not mandate this nor does it say how income is to be imputed. Imputing income to a spouse who only works part-time may mean using their same base pay but treating them as though they worked 40 hours a week. This may not be done, though, with parents of very small children.

Another way income may be imputed is if the spouse has some advanced degree or training and they simply choose not to work in that field even though it would pay better. A judge can consider this in setting an imputed income.

The reason to seek imputing income to your spouse (or co-parent if not married) is because it will decrease your percentage of income as it relates to the combined income of the couple. This usually results in a net decrease in the amount of child support you will be required to pay. But, if you are the person seeking child support to be paid to you, disregard everything I just said.

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Dividing stuff up

Long ago I wrote a post on the Kentucky Bankruptcy Law blog about how equitable distributions as a result of divorce are treated in a Chapter 13. You can read that post here. In short, a domestic support obligation that arises from the distribution of property will be treated as a general unsecured debt in a Chapter 13. This creates a quandary for settling matters, especially in this market where houses (the major asset that is divided up in a divorce) take so long to sell.

If there is a major asset, like a house, that has equity to be divided and one party wants to hold onto it or control its sale, one strategy is to realize that equity through debt. This can be done two ways. The simplest way and best way is the party holding onto that asset to take out a loan for the amount of equity owed and give that upfront to the other spouse. That used to be easier to do, but with dropping real estate values, obtaining a loan, even a secure one, could be difficult or impossible.

A second approach would be for there to be a promissory note from the spouse keeping control of the asset to the other party and secure that loan against the property. While this is not as good as having cash in hand, it is far better to have a secured debt going into a Chapter 13 than just an unsecured domestic support obligation that can get discharged. Since it is likely a junior lien on the property, then it could still not be paid in full, but the chances are at least better.

Posted in Distribution of property, Divorce lawyer tactics, Family Law | Tagged , , , , , , | 1 Comment

Things to be aware of when facing divorce and debt

Bankruptcy of an ex-spouse after the entry of a divorce decree (the dissolution of a marriage) can have substantial implications of obligations owed by that ex-spouse to you.  I’ve written a post regarding domestic support obligations in Chapter 7 as compared to Chapter 13 bankruptcy and I encourage you to click over and read it since I am not going to go into details here.  What I do want to reiterate here is that it is important to know how child support, alimony (maintenance) and equitable distributions of assets are treated in bankruptcy.

In order to insure you do not end up getting paid only a percentage of what is owed to you from distribution of marital assets, be sure to get your share of assets right away rather than allowing for payment over time.  The most common example is where one party wants to keep the marital residence after the divorce is final.  They agree, then, to pay their soon to be ex-spouse a set number of dollars of the equity of the house over time in exchange for retaining the house.  Later they go into Chapter 13 bankruptcy and suddenly, you only get 10% or less of what’s owed to you and they get to keep the house.

As hard as it may be, the more financially sound thing to do is to insist of the property being sold or refinanced and realize your share BEFORE ever quitting your interest in the property.  Also, just because something is called “child support” or “alimony” does not make it non-dischargeable.  The bankruptcy court can make its own determination based on the facts of the case as to whether it is actually an equitable distribution of property under the guise of alimony or child support, so it is risky to try and realize your share of equity by increasing child support or getting alimony.

Posted in Assignment of debt, Distribution of property, Divorce / Dissolution of Marriage, Family Law | Tagged , , , , , | 2 Comments

Oh, no! The status quo

When one spouse decides to pursue a divorce, the non-filing spouse often feels an overwhelming sense of powerlessness. Their world turns upside down and the decision frequently surprises them. In these moments, desperation sets in and the non-filing spouse makes concessions to the filing spouse to try to win them back.

The danger this creates is that in a divorce, judges favor to maintain the status quo; they prefer to leave things as they find them unless there is a compelling reason. This is a general principle and does not apply equally to every judge or every situation. But, it is best not to risk it.

The areas this usually plays out are in living arrangements, timeshare, and support payments. The non-filing spouse may move out of the marital residence, acquiesce to less than equal time with minor children, or agree to pay excessive child support and maintenance all to buy time and favor with they spouse. Unfortunately, if these concessions last very long before coming before a judge, they tend to stick.

Even if you desperately want the marriage to work out despite your spouse filing a divorce action, consult an attorney. One of the chief benefits to having an attorney in a divorce is protecting you from yourself. They know what the law says and what their local judges typically order. They can stop you from giving up ground that your really do not want to relinquish in the long run while still keeping a cooperative spirit viable.

Posted in Child custody, Child support, Distribution of property, Divorce / Dissolution of Marriage, Divorce lawyer tactics, Family Law, Time-share | Tagged , , , , , , , , , | Leave a comment

Affording a Dissolution of Marriage

I am afraid to say that using an attorney in a dissolution of marriage action is never going to be “cheap”. But there are some things to be aware of when looking for an attorney. A low “flat fee” or low initial retainer does NOT mean that attorney is going to be a lot cheaper. It means part of that attorney’s marketing approach is getting you in the door and signed up. So, be sure to ask what they see the typical costs running.

Also, a lawyer who instantly agrees with your position and seems to get fired up about it may cost more in the long rung. Lawyers in family law typically charge by the hour and so the more litigation that occurs the more they make. A lawyer that quickly is incited to emotional reactions (feigned or real) is a red flag that they will pursue more litigation instead of seeking resolution. Perhaps that is what you hope for, but be ready to pay for it.

Posted in Attorney Fees and Other Costs, Divorce / Dissolution of Marriage, Divorce lawyer tactics, Family Law | Tagged , , , | Leave a comment