Tag Archive for: community property

Maria Shriver officially files her divorce petition

When the news initially broke that Maria Shriver and Arnold Schwarzenegger, it was not clear what was going to be next for the couple. They announced their separation just weeks after the 25th anniversary. The couple had accumulated substantial assets over those 25 years, with Schwarzenegger as a lucrative box office draw and Shriver working as an acclaimed journalist over many of those years. The couple also has four children, two of them under 18 years of age, together. If they were going to file for divorce, the issues of marital property division, child support, child custody, and alimony would need to be resolved.

Recently, we learned more about the fate of their marriage. Citing “irreconcilable differences,” Maria Shriver officially filed for divorce from Arnold Schwarzenegger in California last Friday. Like Wisconsin, California is a community property state. This means that both spouses are legally entitled to half of the property earned during the marriage.

The divorce filing came six weeks after it became publicly known that Schwarzenegger had an extra-marital affair and had fathered a child with the family’s housekeeper. The couple separated after Shriver learned of the affair.

According to the divorce petition, Shriver is seeking to share physical and legal custody of the couple’s two minor children with Schwarzenegger. The petition also states that the property accumulated during their marriage will be divided at a later time.

Given the tumultuous circumstances surrounding their separation and divorce, one could easily foresee that this divorce would be a hotly contested one. However, the fact that Shriver wants to share child custody with Schwarzenegger indicates that this divorce may be on its way to being settled by the parties.

Source: San Francisco Chronicle, “Maria Shriver seeks divorce from Schwarzenegger,” Carla Marinucci, 7/2/2011

Dodgers Divorce Closer to Resolution: Part I

The Dodgers are one of the most storied franchises in Major League Baseball, and one of baseball’s most valuable teams. The team has been in some turmoil, mainly for off the field reasons. Most importantly, who will own the team for next season depends on the ruling in a divorce case.

Frank McCourt bought the team for approximately $355 million in 2004. This year, Forbes Magazine estimated the team’s value at $727 million including Dodger stadium and other team-owned facilities. Frank McCourt and his wife, Jamie, have been married since 1979 and were both active in owning and managing the team. However, in 2009 Frank McCourt fired Jamie McCourt as chief executive of the team. Shortly thereafter, Jamie filed for divorce from Frank.

Frank is claiming full ownership of the Dodgers based on a post-nuptial agreement they signed after purchasing the team, but before moving from Massachusetts to California. The post-nuptial agreement would give Frank complete ownership of the Dodgers, and Jamie would receive sole ownership of the McCourts’ vast real estate holdings.

Like Wisconsin, California is a community property state. In a community property system, the property of both spouses is considered to be marital property and each spouse has half-interest in all marital property. When a couple divorces, the marital property must be divided between them. Jamie McCourt is arguing that the post-nuptial agreement is invalid under community property law, and therefore she is entitled to a 50 percent share in the Dodgers.

They presently have a divorce case pending in Los Angeles County Superior Court. That case would rule on the validity of the post-nuptial agreement and determine who gets what in the McCourt divorce. While that case is pending, the McCourts are also participating in mediation, a form of dispute resolution that bypasses the courts and gives the parties an opportunity to reach a negotiated compromise. In our next post, we will go into more detail on the McCourts’ mediation and the case that is presently pending in court.

Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010

Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)

Dodgers Divorce Closer to Resolution: Part II

In our last post, we discussed the Frank and Jamie McCourt divorce. Unless they can reach a settlement, the judge in the McCourt’s divorce case will determine the ownership of the Los Angeles Dodgers. Ownership of the Dodgers will depend on the validity of the McCourts’ post-nuptial agreement and an interpretation of California’s system of community property law- a system similar to Wisconsin law.

While their divorce case is pending, the McCourts have also participated in mediation in an attempt to reach a compromise. Last week, the judge overseeing the mediation met with each of the McCourts separately and advised them of how he believes they should divide ownership of the Dodgers.

While the mediator ordered that the parties not publicly discuss the mediation, reports indicate they have until the end of the month to accept or reject the mediator’s recommendation. Reports also indicate that the mediator’s opinion would give Jamie an interest in the Dodgers. Although the details of the mediator’s opinion are presently confidential, past settlement and mediation discussions do shed some light on what is being discussed.

The McCourts have attempted to reach a settlement many times, both with and without a mediator. In the past, discussions between the McCourts have established that Jamie would give up her interest in the Dodgers and Frank would compensate her. However, the parties have been unable to come to terms on how much should be paid. If the McCourts cannot settle this issue, it will be up to Los Angeles Superior Court Judge Scott Gordon to make a ruling on the post-nuptial agreement and the ownership of the Dodgers. Judge Gordon has until December 29 to rule in the case.

Almost any divorce has the potential to have very complex issues that can be difficult to resolve. The McCourt divorce demonstrates that when there are significant assets in dispute, property division issues can be difficult to settle by compromise alone. The McCourts have made several attempts at reaching a negotiated compromise, but if they cannot reach a compromise then this case will be in the hands of a judge.

Sources: Los Angeles Times: Mediator gives McCourts settlement proposal; Bill Shaikin, 11/19/2010

Forbes.com: The Business Of Baseball, Los Angeles Dodgers (http://www.forbes.com/lists/2010/33/baseball-valuations-10_Los-Angeles-Dodgers_338671.html)

Understanding debt and divorce in Wisconsin

Most people understand that marital property is divided in a Wisconsin divorce. However, the other side of that coin includes the division of marital debt. The division of debt can be as important, and in some cases more important, than dividing marital property.

All debt that is accumulated over the course of a marriage, for homes and cars, is categorized as community debt. After divorce, both parties are equally responsible to pay back this debt. For example, if you and your former spouse purchased a car for $30,000 and paid off half of it, you will both share equal responsibility in paying back the remaining $15,000.

The situation can be more complicated, however. If your spouse purchased that vehicle without your knowledge, even when using a credit card that was in his or her name only, you will still owe the same share of the money if you live in Wisconsin or other community property states.

Other forms of debt include living expenses. Living expenses typically include the money you pay for utility bills, groceries, gasoline, cell phone and cable bills, and rent or mortgage payments. Items like appliances, including refrigerators, TVs and gym equipment, are considered to be community property.

However, it becomes very difficult to properly assign debt when one spouse had existing debt before the marriage and both parties add to that debt during the marriage. This type of situation often requires a detailed accounting and investigation of expenses.

If you have questions about marital debt or property division in Wisconsin, an experienced family law attorney can help you understand your rights and obligations under the law.

Source: Wallet Pop, “Divorce and Debt: What You Owe and What You Don’t,” Geoff Williams, 2/25/2011

Prenuptial agreements can protect property in Wisconsin

When people divorce in Wisconsin, their property is divided between them according to Wisconsin’s community property law. Wisconsin’s community property law starts off with the presumption that all property and debts of the spouses that were acquired during the marriage are equally owned and therefore will be equally divided in the event of a divorce.

This poses unique problems for people who own a business. In many situations, a spouse of a business owner will be entitled to a share of the business. This can be so even if the business was established well before the marriage. With that in mind, many people would like to do what they can to protect their business interests in the event of a divorce.

Many people use a prenuptial agreement to protect their businesses in the event of a divorce. However, prenuptial agreements are very complex documents and should only be made with the advice of an experienced family law attorney.

Generally, a prenuptial agreement is a contract between two spouses that specifies what the spouses’ property rights would be in the event of a divorce. The contract must be signed by both spouses before the wedding. In order to be binding, a prenuptial agreement must meet several legal requirements.

Prenuptial agreements must be in writing. Verbal prenuptial agreements are generally not enforceable. The agreements must also be the product of both spouses acting freely and there can be no coercion or force involved. These agreements should also provide for a full disclosure of assets and the signing of the prenuptial agreement should be witnessed.

Importantly, prenuptial agreements need to be fair. These requirements may seem straightforward, however many couples inadvertently create a prenuptial agreement that fails to meet these legal requirements. In order to make sure you have a prenuptial agreement that is airtight, it is important to work with an attorney who is both knowledgeable and experienced in Wisconsin family law.

Source: Forbes.com, “Divorce-Proof Your Business, Even If You’re Still Single Or Happily Married!,” Jeff Landers, 4/19/2011

Husband solves a community property puzzle

The Wheel of Fortune spun and a divorced husband and wife are going to share the prize. Scott Dole will need to share the $51,600 jackpot he won on the popular game show with his ex-wife Carrie Dole.

The question before family court Judge James Rulli involved whether or not Scott’s Wheel of Fortune winnings constituted community property that needed to be shared equally between husband and wife or if the money belonged solely to Scott. Like Wisconsin, the law of the Doles’ home state provides for an equal distribution of assets in a divorce.

Carrie Dole had filed for divorce long before the game show appearance by her husband, but the couple had reconciled their differences at the time the show was filmed. Carrie Dole was living with her husband as a married couple and even traveled with him, staying in the same hotel room during the Wheel of Fortune taping.

Judge Rulli found that the prize money was community property subject to the 50-50 community property law and ordered the winnings to be split equally between the two, saying that it appeared the couple really wanted to be together before and after the prize was won.

At the trial, Scott Dole insisted that he should be allowed to keep the entire jackpot because his wife owed him for her share of an inheritance left to Scott by his late father. The money eventually went toward the purchase of a home.

A film segment showed the couple hugging enthusiastically on camera after the winning appearance. At the time, Carrie Dole testified that she had requested her attorney withdraw the divorce petition.

The $46,988 after-tax final amount was placed in an escrow account pending the outcome of the judge’s decision.

Source: The Seattle Times, “‘Wheel of Fortune’ jackpot split 50-50 in divorce,” Laura McVicker, 5/26/2011

Don’t forget about IRS when deciding divorce agreement

The IRS has some very interesting rules when it comes to reporting the income and assets of divorcing couples. To make it even more complicated, those rules are different in community property states like Wisconsin.

The first thing to know before you check the “married” or “single” box on your tax return is that the IRS wants to know what your marriage status was on Dec. 31. If your divorce became final on Jan. 1, you must check the married box. If you live in Wisconsin, the state treats both incomes as community property and you may have to include part of your spouse’s income as your own for the part of the year you were still married.

You and your ex-spouse must also decide who is going to claim head of household – and take advantage of the greater deductions – for the part of the year that you were married. Generally speaking, if you paid for more than half of the housing costs for the year, and/or lived on your own for more than six months, and/or the children lived with you for more than six months, you can claim head of household.

You must also decide who is going to claim the tax write-off for the children. Usually the parent with whom the children live with the majority of the time will take the write-off. If there is shared parenting time and joint custody, some couples take turns claiming the children every other year.

Keep in mind when determining and agreeing to alimony and child support payments that alimony is deductible by the payer and must be claimed as income by the payee. Child support is neither of those things so you must be careful how you describe certain payments in the divorce decree.

When dividing assets and property, the IRS can hit you unexpectedly. If you are awarded part of your former spouse’s retirement account or 401(k) it’s a good idea to roll over that money into a retirement account of your own so you do not have to pay penalties or fees on that money.

To avoid paying capital gains or losses on a property transfer you must complete the deal within a year of the divorce date unless the event is specifically detailed in the divorce agreement. In that which case you have up to six years for any property transfers.

Source: dailyfinance.com, “Don’t Let Divorce Destroy You at Tax Time,” Dan Caplinger, July 23, 2012