AFTER DIVORCING, MAKE A NEW ESTATE PLAN

Many people create their first will after getting married. However, if you are now divorced or going through a divorce, it may be time to look again at your estate plan. A married person will usually plan his or her will together with the spouse, and often has many provisions regarding the spouse in the will. After divorce, it is likely that plan is no longer appropriate.

State Laws Vary

A few states will revoke a will after a divorce entirely. Others will simply ignore provisions that relate to the ex-spouse. However, in any case, it is likely that creating new estate planning documents is a simpler and more secure way to plan for the care of your family.

Nor are the issues solely related to asset distribution in your will. Other documents common to estate planning, such as health care directives and durable powers of attorney, should be changed immediately so that your ex-spouse is not in charge of financial or health care decisions in the event you are incapacitated.

Similarly, after a divorce, you will likely want to change the beneficiary (the person receiving the property) for the following:

  • Any trust provisions listing your spouse should be amended
  • Life insurance policies
  • Retirement plans
  • IRAs
  • Property with right of survivorship, such as payable-on-death bank accounts

These documents cannot be revoked through a will; rather you must revoke each one individually.

Other Relationships and Stepchildren

In addition to a post-divorce review of your estate plan, other relationships, such as remarriage, new children or children from a previous relationship, may be more likely to prompt a reorganization of the distribution of estate assets. When these circumstances apply, an individual should be especially careful that his or her will and or postnuptial agreement reflects his or her intentions.

Some divorcing couples may actually still want to retain certain provisions for an ex-spouse. However, in order to do that, you may have to make a specific amendment to your will stating so, as your state’s law may assume that you no longer wish to provide an ex-spouse with assets or decision-making powers.

After Divorce, Contact an Estate Planning Attorney

Many attorneys and law firms are able to take care of both your divorce and your estate planning needs. Discuss with your attorney how your divorce will affect your estate plan.

THE IMPORTANCE OF RETAINING LEGAL CUSTODY OF CHILDREN AFTER DIVORCE

The hardest part of many divorces is often figuring out child custody issues. Parents love their children and want to maintain relationships with their children. When parents cannot figure out a way to divide their children’s time, the court has to step in and decide. Parents in Tennessee should be aware of the different types of custody and how Tennessee courts make child custody decisions.

Legal and Physical Custody

There are two different types of child custody in Tennessee. Physical custody refers to where a child lives and the daily care of a child. In Tennessee, the court may award either parent sole physical custody, or grant joint physical custody. When parents have joint physical custody, the child splits time between each parent. However, joint custody does not mean equal time with each parent. The child may only spend some weekends and holidays with one parent, for example.

Legal custody refers to a parent’s right to be involved in making major decisions about his or her child’s life in such areas as education, religious training, health care and extracurricular activities. A parent may retain legal custody of a child even if the parent does not have physical custody. Tennessee courts have the option of awarding parents “joint conservatorships,” where parents share legal custody but only one parent has physical custody. A joint conservatorship may also exist where only one parent has legal custody but both have physical custody, or when parents share legal and physical custody.

Parents who maintain legal custody of their children, even if they do not have physical custody, ensure that they remain involved in the upbringing of their children. Custodial parents still need to consult with the non-custodial parents when they share legal custody before making any major changes in the child’s life.

Tennessee Child Custody Factors

Tennessee courts make custody decisions with the best interests of the child in mind. When determining a child’s best interests, the court considers a number of factors, including:

  • The emotional ties between each parent and the child
  • Each parent’s parenting abilities and willingness to encourage a close relationship between the child and the other parent
  • Each parent’s ability to provide for the child
  • The child’s adjustment to home, school and community
  • The mental and physical health of each parent
  • The child’s preference, if over 12 years old
  • The character of those who frequently interact with the child
  • Any allegations of abuse

Talk to a Lawyer

Child custody matters are often emotionally-charged issues, and can seem overwhelming to parents. Parents should not try to handle such affairs alone. If you have questions about child custody, seek the assistance of a skilled child custody attorney who can help advise you of your options.

RETIREMENT ACCOUNTS IN DIVORCE: THE IMPORTANCE OF PROTECTING YOUR FUTURE

One of the most important parts of divorce is the division of marital property. Decades ago, the marital home was typically the most valuable asset that had to be split in divorce. Today, in the wake of the housing crisis, this is rarely the case. In many divorces, retirement accounts are often the largest (and most complex) asset that needs to be divided as part of the divorce property settlement.

Carefully worded agreements, proper tax treatment two big considerations

Retirement assets can come in many forms. It is very important not to overlook retirement accounts of any kind that have accumulated value over the course of the marriage. Some of the most common retirement assets include:

● 401(k)s

● IRAs

● Pensions

● Profit sharing arrangements

● Stock bonus plans

● Keogh plans (tax deferred pension plans available to self employed individuals or unincorporated businesses)

Unlike many other types of assets, dividing retirement accounts is not simply a matter of dividing dollar amounts; for many types of retirement assets, it more about spelling out in painstaking detail your wishes for the account.

For example, imagine that a couple was in the process of divorce and they had a 401(k) account worth $200,000. Simply saying that one spouse was entitled to $100,000 rolled over into an individual account would be a poor way to word any kind of divorce settlement, because market fluctuations could drastically affect the value of the account. If this agreement was struck in the summer of 2008 before the market crashed, the account would be significantly depleted by the time any rollover was finalized, and $100,000 would be far more than a 50 percent interest.

Sometimes retirement assets do not lend themselves to an immediate split. When each former spouse is entitled to periodic benefit payments, it is especially important to set up a qualified domestic relations order, or QDRO. When taxable retirement benefits go to your ex from an account in your name without a QDRO, it is treated as a taxable distribution to you, meaning you have to pay the IRS for money that goes directly to your ex. A QDRO establishes your ex’s legal right to receive a designated percentage of payments, ensuring that he or she will be responsible for any income taxes associated with those distributions.

Contact a family law attorney to learn more

When splitting up retirement assets in a divorce, the stakes are high; any missteps can be costly. Having the assistance of a family law attorney with an accounting or financial background can be extremely helpful. To learn more about dividing retirement accounts in divorce, get in touch with an experienced family law attorney today.

DIVORCE CAN SEND YOUR CREDIT SCORE PLUMMETING

Divorce certainly takes an emotional toll on couples. But it can also place a significant strain on a couple’s finances. As a recent story by U.S. News & World Report puts it, in a divorce income that previously supported one household is now spread out over two. That causes financial stress no matter how much money is involved.

If you’ve gone through a divorce, it’s time to take a closer look at your finances. The U.S. News story suggests several steps that newly divorced couples can take to make sure that their separation doesn’t destroy their financial health.

First, you need to order a copy of your credit report. You can find this report, which will tell you how much credit card debt you’re carrying and whether you’ve been cited for late or missing payments, from AnnualCreditReport.com. This is the only site from which you should order a credit report, because it’s the only one guaranteed to provide your report for free.

Once you have your report, look it over. Make sure that there aren’t any errors. If you’ve always paid your auto loan bill on time, make sure that your credit report doesn’t say that you missed two payments earlier this year. Every mistake in your credit report can cause your score to fall.

The U.S. News story also recommends that you separate your credit from that of your former spouse. Remember, if you and your former spouse as both listed as co-owners of a credit card, your credit will suffer if your ex runs up an abundance of credit card debt.

Finally, if divorce has taken a financial tool – maybe you’ve even had to file for bankruptcy protection – it’s time to start rebuilding your credit. The good news? You can boost your credit scores if you exhibit good financial behavior for a long enough time. The credit site MyFICO.com recommends that you start a new history of paying all your bills on time and reducing, as much as possible, your outstanding credit card debt. MyFICO.com also recommends that you close any open credit card accounts that you no longer use.

The financial toll that divorce can take is real. Fortunately, it is possible to recover from your credit woes. It just takes a few simple steps.

PRENUPTIAL AGREEMENTS ARE NOT ALWAYS WHAT THEY SEEM

Prenuptial agreements are agreements between parties contemplating marriage that alter or confirm the legal rights and obligations that would otherwise arise under the laws governing marriages that end either through divorce or death. Prenuptial agreements are nothing new. King Edward IV reportedly had a prenuptial agreement with Eleanor Butler sometime between 1461 and 1464.

Tennessee has not enacted the Uniform Premarital Agreement Act-approved by the National Conference of Commissioners on Uniform State Laws as an attempt to streamline prenuptial agreement laws throughout the country. Tennessee statutes authorize prenuptial agreements through a signed writing, and, as a general rule, Tennessee courts enforce a prenuptial agreement if the party seeking enforcement demonstrates that the agreement was entered into freely, knowledgeably, and in good faith and without the exertion of duress or undue influence. But consider the case of O’Daniel v. O’Daniel.

The O’Daniel decision

The parties were married on October 14, 2006. Four days earlier, they executed a prenuptial agreement that provided, in part, that, with limited exceptions, as follows:

In the event the marriage is terminated by divorce, annulment, or any other means other than the death of a party after five years of marriage has passed, … to the extent allowed by law, each of the parties shall waive any right of support, maintenance or temporary alimony which he or she may be entitled to receive from the other as provided by law.

At the time of the marriage, the wife worked a few jobs, mainly clerical receptionist, front-desk work. The wife did not work outside the home during the parties’ approximately five-and-one-half-year marriage. The husband was a successful businessman of considerable wealth. At the time of their marriage ceremony, both parties were generally in good health. Approximately one year after the date of the marriage, however, the wife was diagnosed with a rare and potentially life-threatening medical condition. On three occasions during the marriage the wife had to be hospitalized as a result of her condition, each time for an extended period of time. The medical bills totaled $431,043.62. Of this amount, their health insurance paid $134,498.83, and the parties paid $11,117.65.

The wife filed for divorce in 2011 and alleged that the prenuptial agreement was valid and enforceable, with the exception of the provision waiving any right of support, maintenance or temporary alimony. The wife asked the court to invalidate this alimony waiver because its enforcement was likely, according to her, to render her a public charge. Both the husband and the wife admitted they entered into the agreement freely and knowingly. But the wife testified that she could not afford to pay her health insurance premiums. She argued that if she did not have health insurance, her next infection was likely to render her bankrupt and reliant on public assistance for her medical needs and her survival. The trial court found that, without health insurance, it was likely to result in the wife becoming a public charge in the reasonably foreseeable future.” The appellate court agreed and invalidated the provision limiting spousal support.

Anyone cont emplating a prenuptial agreement should seek experienced Tennessee legal counsel for advice and care in drafting the document as there are many legal considerations that impact the interpretation and enforceability of such agreements.

FIRST SAME-SEX DIVORCE FILED IN TENNESSEE SHOWS FAMILY LAW COMPLEXITIES

Family life is complicated. Relationships with children, romantic partners and extended family members form a complex web that can be very difficult to navigate.

It stands to reason that family law, like family life, can be very complex. One recent Tennesseedivorce case is a good example of the kind of intricate legal challenges that can accompany a family law case.

Granting divorce means Tennessee would have to recognize same-sex marriages

As of early 2014, 17 states have legalized same-sex marriage. Tennessee is not among them. In fact, Tennessee even has state laws, as well as a constitutional amendment, specifically banning same-sex marriages.

The policy of Tennessee is to not recognize same-sex marriages performed under the valid laws of another state. But, this can be a thorny issue; even though states may elect to not perform same-sex marriages within their borders, there are clauses in the U.S. Constitution that suggest that even if a state bans same-sex marriages, it may have to recognize same-sex marriages performed under the valid laws of other states.

Recognition of a marriage by a state has a number of implications, from tax consequences to eligibility for government benefits. One of the most important elements of state recognition of a marriage is access to the family law courts when it becomes necessary to dissolve that marriage.

In late January, the first Tennessee same-sex divorce case was filed. The couple married three years ago in New Hampshire, where same-sex marriage is legal. But, both partners now live in Tennessee, and are unable to return to New Hampshire to get a divorce because the laws of that state require those seeking a divorce to establish residency by living there for at least a year prior.

If the divorce is granted, it would be a landmark case in Tennessee. Being the first same-sex divorce filed in the state, commentators are speculating that the case could go as high as the Tennessee Supreme Court.

Should the divorce be granted, it would not necessarily mean that same-sex marriage would be legal in Tennessee, only that the state recognizes marriages performed under the laws of another jurisdiction. There has been a string of court decisions in other states striking down portions of same-sex marriage bans that prevent states from recognizing marriages legally performed in other states since last summer, when the U.S. Supreme Court handing down a ruling on the issue.

Your family law case may be equally complicated; get the help you need from a lawyer

Your family law issue probably does not involve same-sex divorce – in fact, at this time, only one family law case in Tennessee does. But, the unique issues in your divorce, child custody problem, prenuptial agreement or other family law situation could be just as complex.

An experienced Tennessee family law attorney can sort out the issues in your case. Your lawyer will help you pursue positive solutions through strategic negotiations, and if that fails, will argue on your behalf in front of a family law judge.

Every family law case is unique in its own way, whether that means something as large-scale as confronting an unresolved conflict of state and federal law or something as personal as where your children prefer to spend their time. Whatever your family law concerns, your lawyer will be by your side, fighting for your best interests, pursuing the outcome you desire. Bring your family law issue to the attention of a Tennessee attorney today, and find out more about the legal resolutions that may be available to you.

Evaluating the Goodwill of a Business During Divorce

EVALUATING THE GOODWILL OF A BUSINESS DURING DIVORCE

Divorce is never easy. If one or both spouses own a business interest, however, it can complicate the legal process of dissolution quickly. Generally, the valuation of a business is the most complicated and factually unique part of a high-asset divorce.There are any number of possible outcomes in a divorce with business ownership as martial property. For example, one spouse may give up interest in the business in exchange for alimony. Or both spouses may continue to run the business after divorce. One spouse may agree to a minority stake in the business in lieu of alimony. One option is not necessarily better than the other; in all cases, however, the value of the business must first be established in order to determine what is appropriate.The full range of possibilities regarding business valuation and division in divorce is extensive and beyond the scope of this article. Rather, below the reader will find a brief overview of one way to value a service business that receives much of its income from personal goodwill to customers.

Valuation basics

The value of a business includes both tangible and intangible assets. Tangible assets require due diligence and investigation, but can be relatively simpler to value. Tangible assets are things like revenue stream and equipment used to run the business. Intangible assets, on the other hand, can be harder to quantify. A large portion of a business’ intangible assets includes “goodwill”. Goodwill is the characteristics of a business – whether the name brand or an individual owner – that bring in new and returning customers.

Double dipping

If a significant portion of the value of a business is in personal goodwill, then there may be issues regarding “double dipping.” For example, the sole owner of a business may bring a significant amount of personal goodwill to the business – the assurance that he or she will do a good job performing the duties of the business. In such a case, the owner’s contribution to the business is not transferable. This is “personal goodwill.” A problem in divorce may arise when the business owner’s income stream is used to determine spousal support and also used to value the business. The owner is getting hit twice, once based on personal income from the business, and second from the business being valued higher because of his or her personal goodwill contribution. If personal goodwill is excluded from the value of the business, however, then the owner is not subject to double dipping.

There are several ways to determine if a business is largely valuable based on personal goodwill. Value based on personal goodwill could include:

  • The experience, skill and reputation of the individual owner.
  • Lost revenue stream if one ex-spouse does not continue to operate the business after the divorce.
  • The inability to attract new customers and referrals apart from the persona of the individual.

Getting experienced help in valuation and divorce

Divorce is a significant life event even absent the financial ramifications of living separate financial lives. When a business is at stake in divorce, the last thing a soon-to-be ex spouse wants is to struggle financially and in business. Business owners in Tennessee considering divorce or in divorce proceedings should contact a skilled family law attorney familiar with business valuation to discuss potential options and next steps.

EXPLORING DIVORCE OPTIONS IN TENNESSEE

Mediation and collaborative divorce are popular alternatives to court litigation, and may offer couples several benefits when getting divorced.

Although traditional court divorce works for some Tennessee couples, it is not the ideal way to dissolve a marriage for others. Fortunately, couples seeking a divorce have several options when it comes to terminating their marriage. Mediation and collaborative divorce have increased in popularity through the years as a civil alternative to traditional court litigation. Rather than suffering through a lengthy and emotional battle to the finish, couples are able to discuss the details of their divorce, including division of assets and child custody, in a non-confrontational way. Not only do these alternative divorce options lead to better results for many couples, but they are a great way to keep up with the significant number of divorces that occur in the United States each year.

Mediation vs. collaborative law

Although mediation and collaborative law are similar in many ways, they have distinguishable differences. According to the Huffington Post, mediation sessions take place under the direction and guidance of a neutral mediator. It is important for each spouse to have their attorney present during mediation as the mediator may not offer legal advice. The mediator ensures that all topics are covered during the negotiations process.

If an agreement is reached, it is important that the agreement be drafted by an attorney so that it will be approved by the court and so that it will be enforceable by either party. The mediator ensures that all topics are covered during the negotiations process.

During a collaborative divorce session, each party has an attorney present to offer legal counsel throughout the negotiations process. According to Think Advisor, the couple is prompted to sign a document agreeing to disclose all important information and to work together in creating a negotiated settlement that will benefit everyone involved. If the couple is unable to come to an agreement and litigation is required, then they must both retain different attorneys.

Advantages to divorce alternatives

Mediation and collaborative divorce are not for everyone. In fact, couples that harbor hostile feelings toward one another and are unable to discuss the terms of the settlement in a professional manner should not enter into these types of negotiation sessions. However, people who wish to simplify the divorce process may enjoy the benefits of mediation and collaborative divorce. According to the American Bar Association, these advantages include:

  • Faster: Many couples can negotiate the terms of their settlement in as little as one or two sessions depending on the complexity of the case.
  • Flexibility: Couples are able to schedule the negotiation sessions around their personal calendar, rather than wait for an appointed court date.
  • Customized: Couples have the ability to design their own settlement based upon their needs rather than leave the details of their divorce in the hands of a court appointed judge; however, agreements involving children must be reviewed by judge and the judge must determine that the agreement is in the best interest of the child(ren).
  • Increased compliance: Studies show that couples are more likely to comply with the terms of the settlement when they have had a role in creating the divorce decree.
  • Non-formal atmosphere: Mediation and collaboration take place in a laid back environment, which often decreases the amount of stress placed on each party.

Studies also show that couples who successfully complete mediation or collaborative divorce have a better relationship with one another than they would have had they gone through court litigation. This is especially helpful for parents and business partners.

Finding legal help

Whether you choose one of these alternative divorce options or decide to litigate in court, an attorney in Tennessee is essential. Going through a divorce can be overwhelming and some people are unable to make clear and concise decisions regarding their settlement during this emotional time.

Keywords: divorce, mediation, litigation