Viewpoint: Things to know about divorce and finances
In addition to stress and host of other emotions, a divorce will likely raise a number of financial concerns. Lawyers and financial planners can partner to help clients navigate the divorce process and build a strategy for their financial future. Although each circumstance is unique and requires specific consideration and analysis, the six commonly asked questions below can assist financial planners in understanding the divorce process and the role that finances play.
Are prenuptial agreements enforceable?
If done properly, prenuptial agreements are binding and enforceable. Depending on the breadth of the terms contained in a prenuptial agreement, it may address all or only some of the issues in a divorce. Considering the terms and conferring with counsel about the enforceability of a prenuptial agreement early on can be critical.
What is marital property?
Marital property is defined as any property acquired during the marriage unless: (a) the property was acquired by one spouse by bequest or by gift; (b) the property was acquired by one spouse in exchange for property acquired prior to the marriage; (c) the property was excluded by valid agreement of the parties; and/or (d) it is an increase in value of property that was acquired prior to the marriage. Gifts between spouses are considered marital property.
Are marital assets/debts divided equally?
Not necessarily. Marital assets and debts are divided “equitably,” not necessarily equally. To determine what constitutes an equitable division the Family Court considers 11 specifically enumerated factors, such as the age and health of the parties, the contribution of each party to the growth or dissipation of the marital estate, and each party’s ability to acquire capital assets in the future. The division of assets and debts is made by court on a case-by-case basis.
How is personal property divided?
When parties cannot agree on how to divide their personal property the Family Court uses the “two list method.” One party itemizes the marital property in the house and divides it into two lists. Those lists are given to the other party. The list recipient selects a list and keeps everything on the list. The list maker retains all the property on the unselected list.
Who gets the house?
If the house is marital property the short answer is, it depends. It may depend on which party can afford to keep the house. Or, if there are children of the marriage, the Family Court may consider the desirability of awarding the house to the party with whom the children primarily live.
Can a party sell or transfer property during the divorce?
Once a petition for divorce is filed and served a preliminary injunction goes into effect. The injunction prohibits the parties from transferring, encumbering, concealing or disposing of marital property without the permission of the other party or the permission of the court, except in the ordinary course of business.
Who is eligible for alimony?
Alimony may be awarded only if a party is determined to be dependent after consideration of 10 enumerated factors. Included in the factors considered by the Family Court is the dependent party’s ability to support his or her reasonable needs though employment or other financial resources, and the other party’s ability to support him or herself while paying alimony. An alimony determination is not formulaic and eligibility is determined on a case-by-case basis.
How long does alimony last?
A dependent party may be eligible to receive alimony for a time period up to one half the length of the marriage, unless the marriage lasted 20 years or more. In that case, there is no time limit to eligibility.
How is child support determined?
Delaware uses the Delaware Child Support Formula, often referred to as the Melson Formula, to calculate a parent’s child support obligation. In certain circumstances, private school tuition may be included in the calculation. Information about the Formula and the support calculator itself may be found on the Family Court’s web page.
Are parents obligated to pay for college?
A parent’s obligation to provide child support terminates when a child has reached age 18 and is no longer in high school, or 19, whichever occurs first. There is, therefore, no obligation for a parent to pay college tuition. For this and myriad other reasons, many parents save for college utilizing 529 accounts or other investment accounts. Depending on how those savings are invested and titled they may be considered marital property subject to division in a divorce.
How are pensions divided?
Typically, pension benefits acquired during the marriage are equally divided through a qualified domestic relations order. If survivor benefits or cost of living increases are available they may be included in the division as well.
Leslie B. Spoltore is a partner with Fox Rothschild LLP and a member of the Family Law Department.