Clients complain about the costs of discovery and experts to value things like pensions, businesses and other assets.  Frequently they waive discovery and valuation and instruct us to skip it altogether.  Steve Linden, who appraises classic automobiles, tells the story of a couple getting divorced and dividing up their martial assets.

The husband had purchased a couple of cars a few years earlier.  One was a beautifully restored 1966 Plymouth Valiant convertible that the wife drove.  The other was a 1970 Plymouth convertible that the husband drove from time to time.

As Linden tells it, “As the divorce proceeded the husband casually suggested that his wife keep the 1966 Plymouth convertible and he keep the 1970 Plymouth convertible. She didn’t see any problem with this and readily agreed. Her attorney however felt that it might be wise to have both cars appraised just to make sure that the value of both cars were similar, even if not exactly the same.”

Linden valued the wife’s care at $15,000.  But the husband’s car turned out to be a very rare and very valuable Hemi Cuda convertible, worth over a million dollars.

by Michael F. Callahan

There was another issue in the Smith case that I discussed last week.  Mr. Smith had retired two weeks before his divorce trial.  Before the decision was entered, we asked the judge to reopen the trial to take evidence of money that Mr. Smith failed to disclose in the amount of $30,000 that he received for accrued leave at retirement.

Mr. Smith’s lawyer argued that these funds were not marital property and so they belonged entirely to Mr. Smith.  Thomasian v Thomasian, 79 Md. App. 188, 556 A.2d 675, 1989 Md. App LEXIS (1989), held that a divorcing spouse’s accrued leave was not marital property.  The trial court agreed.

On appeal, the Maryland Court of Special Appeals distinguished between accrued leave and accrued holiday pay, and actual pay received during the marriage.  The Court said that Mr. Smith was owed money for the accrued leave when he retired and was actually paid for the leave before the entry of the order of divorce.  It was no longer accrued leave, which is not marital property, but it was now money in hand, which is marital property.   Smith v Smith, 996 A.2d 416; 193 Md.App. 29 (2010).

by Michael F. Callahan

During their marriage, Mr. Smith’s mother conveyed real estate to her son and his wife, jointly.  In their divorce, we represented Mrs. Smith.  Mr. Smith contended that his mother really intended to give the property to him.  But he told her to make the deed jointly to him and his wife for convenience, so that his wife would not have to go through probate in the event of his death.  The mother was deceased at the time of the trial.

He asked the trial court to give him a monetary award based on his contribution of the real property to the marriage. Contribution to the acquisition of property titled to the parties as tenants by the entirety is a factor that the court must consider in determining whether to make a monetary award. Md. Code, Family Law Article, Sec. 8-205(b)((9).

The trial court ruled the real property was marital and ordered it sold and the proceeds divided equally.  The husband appealed.

The Maryland Court of Special Appeals held that the deed was conclusive evidence that husband’s mother gave the property to both parties.  Therefore the husband’s contribution to acquisition of this property was equal to wife’s, that is zero, and the trial court did not err in declining to grant him a monetary award.  Smith v Smith, 996 A.2d 416; 193 Md.App. 29 (2010).

Want to buy some divorce insurance?  Jennifer Saranow Schultz reports in the New York Times that SafeGuard Corp. of North Carolina is offering the world’s first divorce insurance called WedLock.  For each $15.99 per month you pay, you can buy $1,250 in coverage.   The benefit covers the costs of divorce such as lawyer fees or setting up a new home.

Then, if you get divorced, you send Wedlock proof, and they’ll send you a check for the amount of insurance you purchased.  You have to be married at least four years, however, before the payout.  You can buy riders to shorten that to three years or get your premiums back if you don’t make it that long.  Every year the company automatically adds another $250 to the coverage for each unit you buy.

The company helpfully provides calculators on its site for Divorce Probability and Divorce Costs to help you figure out much insurance you need.

“The Un-Divorced” is an article in The New York Times by Pamela Paul.  It describes what may be a growing trend in relationships in which two people are living separate lives but see no reason to divorce.  They may even be living with another paramour.  They file joint tax returns and stay on the same health insurance policy.  They might keep each other as pension and life insurance beneficiaries.

As John Frost, 58, says, “Why bring in a bunch of lawyers? Why create rancor when there’s nowhere to go but down?”

I call this Option Zero.  I tell my clients you have two options.  One is a Separation Agreement.  Two is a divorce.  Oh yes, and there is Option Zero.  Do nothing.  Stay married.  Be un-divorced.

Most do not go for Option Zero.  Some want to get remarried.  Some are desperately unhappy with their lives in the status quo and want to move on.  Others do not want to keep contributing to the marital asset pot.  A few, however, can tolerate being un-divorced.

by Michael F. Callahan

In previous blogs, I discussed the differences in property distribution in a divorce in Maryland, Virginia and DC.  Another area where the law of our three local jurisdictions is not the same is allocation of debt in a divorce.

In the District of Columbia and in Virginia, the divorce court has authority to allocate debt between the parties in a divorce case.  D.C. Code Sec. 16-910(b); Va. Code Sec, 20-107.3.E.7, Turonis v Turonis, 2003 Va. App. LEXIS 130.

In Maryland there is no such general authority to allocate marital debt, although the court may consider the debts of the parties along with other economic circumstances in dividing marital property.  MD Code, Family Law Article 8-205(b)(3). Maryland courts can allocate responsibility for debt related to the family home in connection with use and possession orders, Md. Code Sec. 8-208(c), or orders transferring title to the principal residence of the parties.  Md. Code Sec. 8-205(a)(2)(iii).

A divorce settlement agreement is supposed to take care of everything related to the marriage and divorce, past, present and future.  So lawyers usually take great care in drafting them.  They have to peer into the future, predict everything that can go wrong, and select just the right words for clarity in case some judge is trying to figure out what they meant ten years from now.

Which is what the judge has to do in movie star Michael Douglas’s divorce, reports eonline.com.  His ex-wife, Diandra Douglas, has filed suit for 50% of his income from Wall Street 2.

Her $45 million dollar settlement in 2000 has a provision that states she is entitled to half his earnings from any residuals, merchandising or spinoffs of movies made during the marriage.  She claims that Wall Street 2 is a “spinoff”.  He claims that it is a “sequel”.  What a difference one word makes.  How would you rule if you were the judge?

“Break, break for a thousand years, O Sea,
And still you’ll never be as broke as me.” – Anonymous

If you think the Great Recession is tough on you, pity the poor millionaires who can’t afford their divorces.

Elon Musk, co-founder of PayPal and owner of Tesla Motors, says “about four months ago, I ran out of cash.”   His wife wants stock in Tesla, the house, alimony child support and six million dollars.

Tiki Barber, former New York Giant, lost his $300,000 a year contract with NBC in May of this year after he left his pregnant wife of 11 years for a 23 year old intern.  He says his career is in tatters and he cannot afford to pay the settlement amount demanded by his wife.

Sources:

WalletPop.com

FoxNews.com

If you are curious about how the rich and famous settle, TMZ.com has posted the Stipulated Judgment which contains the settlement agreement between Charlie Sheen and Brooke Mueller.  They will have joint legal custody and Brooke will have primary physical custody of their two children.  Charlie will have them on the first, third and fifth weekends of the month from Saturday at 10 AM until Monday at 10 AM.

Charlie will pay Brooke $55,000 a month for child support, plus other expenses, but not less than the child support paid to Denise Richards.

No alimony, but Brooke will get a million dollars for her share of the house, several bank accounts and other assets.  Both agree not to disparage each other in front of the kids.

by Michael F. Callahan

Jean and Joe had been married a long time but they did not spend much time together.  Jean was the high earner and she spent lots of her time on the road for business. The clearest event establishing the separation was Jean’s purchase of a home in Virginia in her own name seven years ago.  Husband lived in Maryland.

Because the date for determining whether property is marital is separation in Virginia and the trial date in Maryland, Jean’s lawyer decided to file the case in Virginia rather than Maryland. Otherwise Jean might have to divide everything she had acquired over the seven year period that the spouses had lived apart and had completely separate finances.

Joe’s lawyer filed an Answer submitting Joe to the Virginia Court’s jurisdiction and never raised the lack of personal jurisdiction.  If Joe’s lawyer had gotten Jean’s Virginia case dismissed for lack of personal jurisdiction and filed Joe’s complaint in Maryland, everything Jean had accumulated during the seven years of separation up to the date of divorce or would have been marital property.  The case settled on favorable terms to Jean.