10 WAYS TO PROTECT YOUR ASSETS
IN DIVORCEby Laura Gitlin-Petlak, Esq.
Note that answers given in this section cannot take the place of a lawyer. For legal advice about your specific situation, you must consult a qualified lawyer. See our
1. Identify your family heirlooms.
It is important to know that heirlooms given to you alone (as opposed to things that were given to you and your spouse) by your family do rightfully belong to you, whether they were given to you prior to your marriage or after you and your spouse married. Also know that there are steps you can take to make sure there is no confusion when it comes time to divide property with your spouse.
2. List and photograph your heirlooms before you remove them from the family residence, then remove them from the family residence.
As you separate, it will be helpful to list all of the items you received as a gift or inheritance. If your safety permits, it is a good idea to photograph the items in the marital residence before you remove them and then remove them to some place that your spouse will not be able to gain access to readily. Too many divorcing people erroneously believe that lawyers will have some cost effective method of getting back heirlooms that they left in the family residence.
3. Get proof that you were given the heirloom as a gift or inheritance. It's important for you to have proof from a relative stating that your heirlooms were passed on to you along, and, if possible their best recollection regarding when the heirlooms were given to you.
4. Get a professional appraiser.
Your interest in some assets need to be professionally appraised so that you can be sure that you get your fair share of the assets.
If you or your spouse operated a business during the marriage, that business needs to be appraised. If you or your spouse worked for an employer that had a retirement plan during the marriage, that retirement plan needs to be appraised. Get your divorce attorneys' advice on who to use to appraise the assets. You need someone who will prepare a straightforward appraisal.
There might be some temptation to follow the example of Arthur Andersen and Enron by using funny accounting and by destroying documents. If you have a business or a professional practice and you employ an accountant who prepares an appraisal of the business in a method that is other than straightforward, you run various risks:
- Your assets may be depleted because you may have to prepare a new
- The mediator or judicial officer may rely more the appraisal prepared by your spouse's accountant to your
- You may subject yourself to being required to pay for your spouse's attorney's fees and costs under Family Code § 271 as a soft sanction for engaging in conduct that does not promote settlement.
Generally, it is not a good idea to use the accountant that you usually use to prepare your business records; you will need someone who is used to testifying in Court and arriving at a value for a business. In short, you will need a forensic accountant to value any business interest.
5. Don't try to use bogus business structures or transactions. There might be some temptation to follow the example of Andersen and Enron by using funny business structures.
For years, family law judges have been seeing business owners claim that the business operated by one spouse is, in fact owned by the spouse and his brother, his uncle, or his father. For years, family law judges seeing one spouse claim that the cash he took to his brother's, father's, or uncle's home as a loan that went bad.
Funny business structures and funny business transactions may be a new issue for Enron stock holders, but funny business structures and funny business transactions are nothing new to experienced family law lawyers, experienced family law mediators, and experienced family law judicial officers.
6. Identify the community property and photograph them, and take what you don't want to have to replace.
Except for specific items of property such as a business that one of you managed, generally, both of you will have the same right to take the items of community property from wherever you were living last.
The person who takes the community property things (e.g., furniture, furnishings, appliances, pots, pans, linens, cars) takes them at their fair market value rather than their replacement value. Say you paid $6.00 for a paperback book: used it's probably not worth $1.00, but it would probably cost $6.00 to replace. Replacement value and fair market value are not the same thing. In negotiations and in court, discussions will focus on fair market value, and fair market value is the price that you could get for the items as a used item when you go to sell it.
Keep the items for yourself of low value that are a hassle to shop for. If there are items that you aren't taking with you or that you are concerned your spouse may come and take that have any significant value, you should be sure to photograph the items and place the photographs in a location that cannot be accessed by your spouse.
7. Know your rights and your spouse's rights to take things from the marital residence. If you have moved out of the marital residence voluntarily, you can still return to the marital residence to take what you want.
If your spouse has changed the locks, unless there is a court order granting your spouse exclusive possession of the marital residence, you can hire another locksmith and have a door opened or you can access the home by breaking a window. (It is likely that you will be required to replace the broken glass, but that may be less expensive than the locksmith.)
8. If your spouse moved out, your spouse can take the items he or she wants from the marital residence.
If your spouse moved out of the marital residence voluntarily, keeping items you want in the marital residence is not protecting your property. Even if you have contacted a locksmith and changed all of the locks, unless there is a court order granting you exclusive possession of the marital residence, your spouse can hire another locksmith and have a door opened or access the home by breaking a window. Your spouse can take the items he or she wants from the marital residence.
9. Don't stop keeping ordinary business records when you divorce.
If you are a professional, for example, and you stop keeping your usual records used to bill clients through a billing service and start relying on informally asking your clients to pay you from time to time, this does not increase the likelihood that you will be able to keep the funds that you earn after separation. The funds that you as a professional earn after separation will need to be carefully allocated.
If you cannot show that the money your received from your client/patient after separation was for work that you did after separation, this is going to create difficulties and it is going to subject more of your records to review.
You may think that your client/patient files are exempt from production due to attorney privilege; however, you need to consult a competent divorce lawyer to advise you about this.
10. Learn what your spouse has been doing with the property. If your spouse has been driving the car that you will be receiving after the divorce, you need to obtain records to make sure that the parking tickets, liens and registration have been paid. You should learn whether your spouse has done anything to have any liens placed against the real estate and accounts where money has been deposited.
And ..... one more:
11. Know your rights and your spouse's rights to obtain business records.
If you and your spouse are still living together and you still have access to his or her law office, you may feel more comfortable asking your divorce lawyer to obtain all of the records necessary to determine support and to determine your interest in the business. You would not doing anything improper, however, if you were to go to his office and make copies of documents and financial records.
Before turning documents over to your attorney, it is preferable, however, code references to clients so that his or her names are not readily accessible to your lawyer. Your attorney and your forensic accountant should sign a confidentiality agreement stating that they will not disclose anything about your spouse's law practice. To avoid any need of your spouse to access actual client/patient records, its is best to keep detailed billing records and accounting records.
© 2002 By Laura Gitlin-Petlak
Ways To Protect Your Assets
In Divorce was written