Tag: assets

How are Retirement Accounts Divided in a Connecticut Divorce?

Retirement accounts are considered marital assets in Connecticut, and unless there is a prenuptial or postnuptial agreement that provides otherwise, retirement accounts will be allocated between the parties as a part of a divorce. Even if a retirement account is titled in the name of one spouse, or is an employer-sponsored plan, it may still be divided between the parties. Whether a retirement account is actually divided, or allocated in some other way, depends on the type of account. Here are the questions that need to be answered in order to determine how retirement accounts can be divided in your divorce:

Is it a Qualified Plan?

Most, but not all, retirement plans are “qualified” plans. The Employee Retirement Income Security Act (ERISA) provides guidelines regarding retirement accounts, regarding participation, vesting, benefit accrual and fund information. When a retirement plan meets ERISA guidelines, it is considered a “qualified” plan, and is eligible for certain tax benefits. The most common types of qualified retirement accounts are 401(k)s, 403(b)s, SEP-IRAs, profit sharing plans, and certain pension plans.

When you are getting divorced, it is important to know whether a retirement account is a qualified plan because if it is, the account can be divided via a Qualified Domestic Relations Order.

What is a Qualified Domestic Relations Order (QDRO)?

A Qualified Domestic Relations Order (QDRO) is a Court Order that instructs a retirement plan administrator how to divide a retirement account between parties. If a retirement account is a qualified plan and can be divided by QDRO, the retirement account is capable of being separated between the parties without penalty. This is preferable because the non-employee spouse’s share can be deposited into a separate account, allowing for each party to manage his or her portion of the retirement funds individually.

Most divorce decrees will set forth the specific division of the retirement account that is agreed upon by the parties (or ordered by a Judge after a divorce trial), and provide for the parties to jointly hire an individual whose expertise is in the drafting of QDROs to prepare the QDRO and submit it to the Court for approval. Once approved by the Judge, the QDRO will be sent to the retirement plan administrator to effectuate the division of the account.

What if the Retirement Account Cannot be Divided by a QDRO?

Certain retirement accounts, such as IRAs, cannot be transferred by QDRO. However, IRAs can typically be divided in a much easier manner- using a process known as a “transfer incident to divorce.” Also called an IRA “rollover,” this process does not require a separate Court Order, and can be accomplished by the parties themselves without the need to hire a special lawyer. Like a QDRO, an IRA rollover transaction is not subject to taxes. Instead, each party is responsible for payment of taxes on the distributions from the retirement account after the funds are divided between them.

What Happens if we Have Non-Qualified Retirement Accounts?

If you have non-qualified retirement accounts, such as certain deferred compensation plans, executive bonus plans, or annuities, the accounts are typically not capable of being divided between the parties. In order to allocate the asset between the parties, a buy-out or a sharing of the distributions if, as, and when the employee spouse receives them may be the best option.

The attorneys at Broder Orland Murray & DeMattie LLC are experienced with the intricacies of dividing all types of retirement accounts and can help you take the appropriate legal steps to protect your rights to retirement accounts in your divorce.

What is an Educational Support Order?

This Week’s Blog by Nicole M. DiGiose

Does the Court have the Authority to Order a Party to Contribute to a Child’s College Expenses?

Yes.  Pursuant to General Statutes Section 46b-56c(a), the Court has jurisdiction to enter an order requiring one or both parents to provide support for a child to attend an institution of higher education or a private occupational school for the purpose of attaining a bachelor’s or other undergraduate degree, or other appropriate vocational instruction for a total of four full academic years.  

Are there any Prerequisites for the Court to Enter an Educational Support Order?

Yes.  The Court may not enter an educational support order unless the Court finds, as a matter of fact, that it is more likely than not that the parents would have provided support for a child’s higher education or private occupational school, had the family remained intact.  

What does the Court Consider in Determining Whether to Enter an Educational Support Order?

Pursuant to General Statutes Section 46b-56c(c), in determining whether to enter an educational support order, the Court shall consider all relevant circumstances, including: (1) the parents’ income, assets and other obligations, including obligations to other dependents; (2) the child’s need for support to attend an institution of higher education or private occupational school considering the child’s assets and the child’s ability to earn income; (3) the availability of financial aid from other sources, including grants and loans; (4) the reasonableness of the higher education to be funded considering the child’s academic record and the financial resources available; (5) the child’s preparation for, aptitude for and commitment to higher education; and (6) evidence, if any, of the institution of higher education or private occupational school the child would attend. 

What Expenses Qualify as “Educational Expenses?”

An educational support order may include support for any necessary educational expenses, including room, board, dues, tuition, fees, registration and application costs, books, and medical insurance.  

What is the Maximum Amount of an Educational Support Order?

An educational support order may not exceed the amount charged by the University of Connecticut for a full-time, in-state student at the time the child matriculates.  The “UConn cap” applies to the entire educational support order for both parents.

Could Parties Agree to Alternate Arrangements regarding Educational Support Orders?

Yes.  The “UConn cap” may be exceeded by the parties by agreement.

When can the Court enter an Educational Support Order?

The Court may enter an educational support order at the time of a decree of dissolution, legal separation, or annulment.  The Court may reserve jurisdiction to enter an educational support order at a later date.  This is usually done in cases of young children.  If the Court does not reserve jurisdiction to enter an educational support order at a later date, then no educational support order may be entered thereafter.  If the Court does reserve jurisdiction, a party may petition the Court to enter an educational support order at a later date.  

When do Educational Support Orders Terminate?

An educational support order must terminate no later than a child’s attaining age twenty-three.

Could an Educational Support Order be entered for a Child’s Graduate School Expenses?

No, the Court does not have jurisdiction to enter an educational support order for a child’s graduate or postgraduate education beyond a bachelor’s degree.  However, parties may agree to be responsible for and share these expenses.

At Broder Orland Murray & DeMattie LLC we have extensive experience in addressing disputes related to a child’s post-secondary educational support throughout Fairfield County and Connecticut, whether the issue arises incident to a dissolution of marriage action or post-judgment.

Common Questions About Divorce in Connecticut

Let’s face it – everyone knows someone who is divorced or going through a divorce. You may start the divorce process already armed with questions and misconceptions. Here are answers to some of the most frequently asked questions about family law in Connecticut.

Am I Allowed to Date During my Divorce?

Your divorce action has been filed in Connecticut. Are you and your spouse now “allowed” to start dating other people? The short answer is, yes. However, while you are not legally prevented from dating during the pendency of your divorce, use discretion. The divorce process is already emotional, even before you add third parties to the mix. The implications of dating during the divorce are different in every case, and can depend on many factors, such as whether children are impacted or if assets are being spent.

Does the Party Who Files for Divorce have an Advantage?

In Connecticut, it does not matter if you are the Plaintiff (the party who initially files the divorce action) or the Defendant (the responding party). There is no presumption of guilt or fault either way.  If your case goes to a Hearing or a Trial, the Plaintiff will present to the Judge first, and the Defendant will go second. Otherwise, Plaintiffs and Defendants are treated the same.

You may have personal reasons as to why you would prefer to be the person initiating the divorce action or the person responding to it. At Broder Orland Murray & DeMattie LLC, we try to take these preferences into consideration when deciding how to start the case.

Can I Change the Locks on my House During my Divorce?

In Connecticut, we have automatic orders (Connecticut Practice Book §25-5) that address this issue. If you are living together with your spouse on the date that the action is started, you may not deny him or her use of the current primary residence. If you believe that your circumstances warrant exclusive possession of the primary residence, you can file a Motion with the Court to request an order which prevents your spouse from living in the home during the divorce.

Do I Need to have a Reason for Filing for Divorce, Such as Adultery or Abandonment?

Connecticut is a no-fault divorce state. This means that neither party has to prove, and a Judge does not need to make a finding, that one spouse is at fault for the breakdown of the marriage. Instead, in Connecticut, a party can file on the grounds of “irretrievable breakdown,” which is a claim that the marriage has broken down permanently without hope of reconciliation. Most Connecticut divorces are filed this way.

If you file for divorce on the basis of irretrievable breakdown, you may still argue that your spouse’s actions caused the breakdown of your marriage. However, such facts will go to the Judge’s decision about the division of assets and alimony and not to the issue of whether or not a divorce should be granted.

How Are Assets Divided in a Connecticut Divorce?

Whether your case is resolved by agreement or a trial court order, in Connecticut, a Judge must find that the arrangement is equitable. Equitable does not always mean even, and assets are not necessarily divided 50/50 between spouses. Your assets will be divided in a way that is fair based on the circumstances of your case. Considerations include the length of your marriage, the nature of your estate, the employability of you and your spouse and the contributions of each spouse, as well as several other factors.

Broder Orland Murray & DeMattie LLC encourages potential clients to arrange for an initial consultation in either our Westport or Greenwich office in order to ask questions, dispel misconceptions and gain knowledge about the divorce process in Connecticut.

What is Legal Separation in Connecticut?

What is Legal Separation?

Legal Separation is a lawsuit that is commenced by one spouse against the other, resulting in an enforceable court order that resolves issues such as custody, division of assets and liabilities and the payment of alimony and/or child support. Married couples who are separating and want to have a formal agreement on important issues have the option of filing for either Divorce or Legal Separation.

Is Legal Separation the same thing as Divorce?

No. Although Legal Separation and Divorce have many similarities, they are two different legal actions. The major difference between Divorce and Legal Separation is that when a Divorce is completed, the parties are free to remarry. When parties are legally separated, they are still legally married and unable to remarry.

Can you turn a Legal Separation into a Divorce?

Yes. There are two ways to turn a Legal Separation into a Divorce. One option is to convert the action (from Legal Separation to Divorce) while the lawsuit is still pending. This requires filing a simple Motion with the Court, requesting that the action be converted before any orders are final.

It is also possible to wait until after the Legal Separation is finalized to convert the Legal Separation into a Divorce judgment. There is no time limit on requesting a divorce after Legal Separation. Sometimes parties live legally separated for years before getting divorced.

Why file for Legal Separation instead of Divorce?

The decision of whether to file for Legal Separation or Divorce is very personal. In some cases, for religious or other reasons, Divorce is not a suitable option. If a couple wants to live separate and apart physically or financially, without the finality of a Divorce, Legal Separation could be a better choice. Legal Separation can also be used as a stepping stone to Divorce. Since it is so easy to convert to a Divorce, sometimes the party commencing the action chooses to start with the softer concept of Legal Separation.

Also, a couple may choose to pursue Legal Separation if they prefer to be separated but can maintain or acquire benefits by remaining legally married, such as health insurance or social security benefits.

What are the Grounds for Legal Separation in Connecticut?

In Connecticut, you need a reason, or grounds, to be legally separated. The grounds for Legal Separation are the same as for Divorce. Since Connecticut is a “no fault” state, it is not necessary for either party has to prove that the other caused the marriage to end. Instead, the parties can simply represent that the marriage has broken down irretrievably, with no hope of reconciliation.

Do I need a Lawyer for a Legal Separation?

Just as in a Divorce, parties are not required to have legal representation to obtain a Legal Separation. However, since major parenting and financial issues are negotiated and decided, including custody, assets, liabilities and support, it is advisable to obtain legal counsel in order to fully understand your rights and obligations pursuant to Connecticut law.

At Broder Orland Murray & DeMattie LLC we apply our experience and knowledge of the law to the specific circumstances of each case, in order to help our clients decide the best course of action when considering a Divorce or Legal Separation.

What Can I Do to Make My Connecticut Divorce Case Move More Quickly?

This Week’s Blog by Sarah E. Murray

  • Provide requested information and documents promptly
  • To the extent possible, make or respond to a settlement offer as early in your case as you and your attorney think is appropriate
  • If both parties and their counsel are motivated to get a case done quickly, it can be accomplished

What is the Relationship between Discovery and How Quickly My Connecticut Divorce Case Moves?

Many Connecticut divorce clients from Greenwich to Fairfield want to know what they can do to ensure that their case moves in a timely fashion.  For many people, once they have made the difficult decision to get a divorce, they do not want the divorce case itself to move slowly.  The timing of Connecticut divorce cases is not always within the control of the client or his or her attorney, but there are certain things that clients can do to ensure that the case moves as quickly as possible.

At Broder Orland Murray & DeMattie LLC, one of the things that we encourage clients to do in order to help their case move in a timely fashion is to provide financial discovery to the other side as soon as possible.  Some clients even provide financial discovery to the opposing party before he or she requests it.  There are standard documents that, under Connecticut Practice Book Section 25-32, are to be exchanged in divorce cases: personal tax returns, tax returns for any business in which a party has an interest, W-2s, 1099s, K-1s, pay stubs and other evidence of income for the current year, bank and brokerage account statements for the past two years, the most recent retirement account statements, the most recent life insurance statement, current health insurance information, information regarding the cost of COBRA following the divorce, and any written appraisals of assets owned by the parties.  In cases where the finances are more complicated or where there are specific issues for which a party seeks discovery, the discovery requests are more comprehensive than the preceding list.  Top Fairfield County attorneys will provide their clients with comprehensive document requests early in the case, and sometimes at the initial consultation, so that clients know what to expect from opposing counsel and can begin gathering their responsive documents.

Clients who want to move their Fairfield County divorce cases quickly will begin gathering the requested documentation as early as possible so that there is no delay in getting that information to the other side.  Under Connecticut rules of practice, parties generally have 60 days to respond to discovery requests, but waiting that entire time to provide discovery will only prolong the case.  Failing to provide all of the requested information is another way to ensure that the case takes longer, as the opposing party will then have to request the missing information and will sometimes file a motion to obtain a Court order that it be provided.

When Can My Divorce Case be Settled?

Once discovery is complete (or nearly complete) in a case, many attorneys will discuss with their clients the possibility of settling the case.  Settling a divorce case has many advantages, and one of them is that settlements can occur at any time in a case, including in the beginning.  Some Fairfield County divorce clients even settle their cases before filing for divorce in order to ensure that the process goes quickly once the case is filed.

Trial dates in divorce cases normally are not scheduled until later in a case, and sometimes not until the case has been pending for almost one year.  If a case goes to trial, a judge has 120 days to issue a decision.  After the decision is issued, one or both parties can file motions to reargue certain issues or to clarify the decision.  Additionally, one or both parties can take an appeal from a trial court decision, which typically takes at least a year to resolve.

Therefore, settling a divorce case well before the trial dates is usually a way to ensure that the case ends in a timely fashion. Issuing a settlement proposal (or responding to one) early on in a case can be an effective way of moving the case toward a final judgment.  The case can be settled as soon as you and your attorney think it is appropriate to begin settlement discussions, usually after discovery is exchanged and the necessary information is gathered.

At Broder Orland Murray & DeMattie LLC, we understand that many of our clients want their divorce cases to move quickly.  The biggest predictor of how quickly a divorce case will move is the parties and their counsel.  We find that when both parties and their counsel are motivated to get through a case quickly, it usually will happen.  Problems can arise when either the opposing party does not want the divorce to occur quickly, and/or that party’s counsel is not cooperative in efforts to accelerate the case.  Both parties do not need to agree on everything in order for their case to move quickly, but both parties do need to be responsive and work with their attorneys to achieve a resolution of the issues.  When both parties are working toward the same goal, i.e., early resolution of their case, it can be accomplished.

How Does the New Tax Law Impact Alimony in Connecticut Divorce Cases?

This Week’s Blog by Carole T. Orland

  • The new tax law signed on 12/22/17 eliminates the alimony deduction for divorces and separation agreements signed after 12/31/18.
  • A payor cannot deduct alimony payments; a recipient will not pay tax on alimony.
  • The effect of the new law may mean greater tax impact for divorcing spouses and less available dollars for ex-spouse and children.
  • This law will affect alimony and unallocated alimony and child support payments.
  • Consult with counsel about finalizing your divorce by 12/31/18.

Should I make sure to get divorced in 2018, if I am going to pay or receive alimony? The short answer is that it would seem that way from what we can tell now. That is because on December 22, 2017, President Trump signed a sweeping tax overhaul bill, which includes an elimination of a 75 year-old tax deduction for alimony payments. This new measure will go into effect for divorces and separation agreements signed after December 31, 2018.

Currently, alimony is tax deductible to the payor and includible as taxable income to the recipient. The advantage of this is that it maximizes the available dollars to the recipient and makes it more attractive to the payor, by minimizing the overall tax effect. This paradigm has been instrumental in reaching out of court settlements in many cases as it typically will lower the tax bracket of the payor, shift dollars to the recipient who most often is in a substantially lower tax bracket, and reduce the amount of taxes that is paid to the federal government.

Additionally, in Connecticut divorces, we often see what’s known as “unallocated alimony and child support.” This is a combination of alimony to an ex-spouse and child support for the children. Child support, if paid separately, is not tax deductible by the payor or includible by the recipient, however when paid as an unallocated order, it is treated as alimony i.e. deductible and includible. Again, fashioning an unallocated alimony and support order has been an effective tool in maximizing available dollars, limiting taxes and most importantly, settling cases. Under the new tax law, the deduction for unallocated orders will be eliminated, after December 31, 2018.

It would appear, based on the above, that the new tax law will have a profound effect on the post-divorce financial situation of divorced parties, by increasing the tax burden and thereby making less money available to the recipient spouse and children. The practical effect is that it is likely to make divorce negotiations more difficult.

While alimony reform laws have been hotly debated in the last several years and states differ as to the availability and application of alimony, many Greenwich and Westport divorce lawyers have found alimony to be essential in allowing spouses to adjust to the post-divorce family economics. At the same time, skilled divorce attorneys have been able to settle cases by carefully crafting alimony and unallocated support payments that work to the advantage of both parties and the family.

If you are currently in the process of divorce and alimony is likely to be in the picture, you should consult with your attorney about concluding your case this year. Likewise, if you are thinking about filing for divorce this year or if your spouse is likely to do so, you should talk to an attorney about how the new law might affect you and whether or not your goal should be to get it done in 2018. Bear in mind, in Connecticut, divorces can often be a drawn out situation. It is not uncommon for them to take at least a year, start to finish. Now is the time to think about accelerating your case if the new tax law could have negative consequences for you.

At Broder Orland Murray & DeMattie LLC, with offices in Westport and Greenwich, CT, we have years of experience in crafting separation agreements that take into account the tax advantages of alimony and unallocated support payments. We have also been successful at trial in obtaining for our clients orders that recognize the tax implications of these payments and which minimize the tax effect while maximizing the available dollars for the post-divorce family.

 

Do I Need a Forensic Financial Expert in My Divorce?

In divorce cases at Broder Orland Murray & DeMattie LLC, we often add a forensic expert to our team. This is particularly true in the financial realm. Many of our cases emanating from Greenwich, Westport, and throughout Connecticut involve sophisticated financial structures, including interests in private equity, hedge funds, and venture capital entities. Disputes arise over valuation and issues like carried interest. It is therefore critical to involve a forensic with expertise in these areas.

Certain compensation structures involve stock options, restricted stock, phantom income, and deferred compensation. A financial forensic expert will assist counsel in analyzing documents so that nothing is left on the table. He or she will provide projections as to the realization of these items and help craft a mechanism for allocating them, sometimes “if, as and when” they are actually received, which is often after the divorce is finalized.

Another area requiring the involvement of an expert is the valuation of a business. The expert will review such items as tax returns, K-1s, profit and loss statements, balance sheets, general ledgers, operating agreements, partnership agreements, bank statements, and payroll documents. Additionally, the expert may do an analysis to normalize earnings to prevent double dipping, so that a reasonable compensation is extracted from the valuation of the business and not counted twice.

In other instances, we utilize a forensic expert to analyze spending in order to determine actual income. The expert will trace expenditures by reviewing bank account and credit card statements, as well as ATM withdrawals. It can be time consuming and laborious to pore over these documents, but it is especially necessary when a party has access to cash in a business.

We will occasionally involve an expert to trace offshore and foreign investments. The expert has access to a wide range of resources and industry tools that are helpful in tracking down these assets. He or she is well versed in analyzing and interpreting the data which is often complicated by design.

We also use forensic experts to analyze personal, partnership, and corporate tax returns. These returns often provide us with a trove of information which, when unscrambled by the expert, provides us with a clear picture of the parties’ finances. While experienced divorce counsel should have a good working knowledge of tax returns, we are typically not CPAs or accountants, and therefore consulting with such experts is often necessary.

So at what stage do we get the forensic financial expert involved? In our practice, it is often the very first call we make after our client retains us. Each expert brings personal strengths and perspectives to the case, and we want to make sure our client hires the optimal expert. Having our expert in at the outset also provides us with an overall understanding of the case and a roadmap as to the best and most efficient way to proceed. We have our expert design for us discovery requests which target the documentation we will need to prove our case, as well as to review and analyze those documents when we receive them.

We often use our expert during negotiations with our adversary, who most often has an expert as well. Many times, counsel instructs the two experts to talk to each other in order to resolve disputes and to assist in settling the case. This works particularly well when both experts are highly reputable and experienced and when they have mutual respect for one another. In many instances, we have our expert prepare us for depositions involving finances and sometimes we have our expert sit in on the deposition to assist as needed. A skilled expert can also be very valuable in the type of mediation we sometimes employ just prior to trial, where the model involves a former judge or esteemed member of the bar, counsel, and clients. It is usually the last best chance to settle the case and a talented expert can often be instrumental in arriving at a resolution.

Finally, in cases where trial is the only option, the financial forensic expert will not only assist in preparation, but also testify during the proceedings. The Court must qualify the expert before he or she can testify to substantive issues and before being allowed to render an opinion. Experts we use have been qualified many times in courts throughout the state, so it is rarely an issue in cases we handle. If an expert is to testify, counsel has previously filed a document known as an Expert Disclosure, which, according to our Rules of Procedure, Section 13-4, includes the field of expertise and the subject matter on which the witness is expected to offer expert testimony; the expert opinions to which the witness is expected to testify; and the substance of the grounds for each such expert opinion. A well-drafted Expert Disclosure, prepared with the assistance of an experienced expert, will prevent any qualification and evidentiary issues at trial.

At Broder Orland Murray & DeMattie LLC, we have included financial forensic experts to our team in a multitude of cases. We know which expert is best suited for a particular matter and are adept at maximizing that person’s expertise to achieve the best results for our clients. While hiring an expert appears to add cost to the case, in the long run, it usually makes for a more cost effective way of developing that case and typically maximizes the financial results for the client. In short, it is most often money well spent.

EXCLUSIVE OCCUPANCY

In many divorce cases, one party voluntarily moves out of the marital home, leaving the other party with exclusive use and occupancy of the premises. The much more likely scenario, however, is that both parties refuse to voluntarily vacate the marital home, often due to their desire to remain with the children and/or a lack of financial resources to maintain two residences. In such situations, often one party will file a Motion for Exclusive Possession asking the court to order the other party to vacate the premises.

As top divorce attorneys in Greenwich, Westport, Stamford, Darien, or New Canaan will tell you, the party moving for exclusive possession is required to indicate the grounds upon which he or she is seeking such a remedy. While no specific grounds have been established for granting exclusive possession of the marital home, there are some factors that the courts have considered more than others.

One factor that the courts have considered when deciding on a motion for exclusive possession is the nature of the relationship between the parties. For example, the mere fact that the parties dislike each other is typically not sufficient to justify exclusive possession of the marital home. However, the courts may be inclined to order exclusive possession of the marital home where the conditions indicate the existence of physical or psychological abuse between the parties, particularly in the presence of minor children.

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LOCATING HIDDEN ASSETS IN A DIVORCE

In many divorces, particularly in Fairfield County, Connecticut, it is common for a party to suspect his or her spouse of hiding assets. Methods of hiding assets can be simple, such as filling a safe deposit box with valuables, or skimming cash from a small business. The less obvious methods of hiding assets are more frequently overlooked– such as pre-paying or over-withholding taxes, overpaying credit cards, using a corporate entity to conceal or transfer funds, establishing a trust to “shield” assets, or failing to disclose equity interests.

Top family lawyers who practice in towns such as Westport and Darien understand the possibility of undisclosed assets and take the necessary steps to discover them. For example:

Insist on a signed, sworn Financial Affidavit thirty days after the return date. Connecticut Practice Book Section 25-5(c)(1) requires the parties in an action for Dissolution of Marriage or Civil Union, Legal Separation, Annulment, or Application for Custody or Visitation, to complete and exchange sworn Financial Affidavit within thirty days of the return date. Believe it or not, this rule is often ignored and rarely enforced. There are instances where one spouse may take months to provide a signed, sworn Financial Affidavit, simply because they have not been pressured to comply with the Practice Book, and the Court is not made aware of the delay.

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