Divorce can be a difficult and confusing ordeal, often influenced by emotion. However, there are some very practical things to do that can help when trying to divide a marital estate.
Is either party going to declare bankruptcy? Will either party buyout real property from the other? Is there realistically any equity in the home in this economy or is it “upside down?” Is there a business shared by both parties and how will it be divided? How will retirement savings be divided? What about shared debts?
These are heady questions that not everyone can resolve on their own.
The team of attorneys at Warnock, MacKinlay & Carman have varied areas of experience and often collaborate on divorce cases.
“It's a team approach,” said Andre Carman, whose practice includes tax, bankruptcy and business law.
Family law attorney Stacie Robb works with Carman and will often use him as a resource when it comes to financial issues in a divorce case.
“It's always good to be able to consult with a tax or bankruptcy attorney,” Robb said. “Sometimes it may be my client who is considering bankruptcy, and sometimes it may be their soon-to-be ex-spouse that is considering bankruptcy. Either way, we need to understand the ramifications and weigh the risks.”
When the parties are contemplating filing bankruptcy, Robb usually recommends trying to get either party to declare bankruptcy prior to the divorce.
If the bankruptcy is handled first there is usually less uncertainty about which of the assets and debts still exist for division and how the divorce settlement can be changed. There are questions about which debts can be discharged and which debts cannot be discharged with a bankruptcy. It's important to compare how a bankruptcy could affect property buyout versus spousal support, she said.
And having a colleague that can collaborate in these areas of expertise can be invaluable, Robb says.
Carman, who holds a Master of Laws in Taxation in addition to his law degree, is one of only a handful attorneys in Arizona that prepares Qualified Domestic Relations Orders , which is a tax-qualified order to divide retirement benefits between spouses.
Robb and Carman agree that the most important thing for anyone who is considering entering into divorce proceedings is to get a full and overall picture of all finances while they are still married. Getting records of all bank accounts, credit card statements and any other creditor accounts (mortgages, government taxes, etc.), while they are still readily accessible can save time and money. Trying to track down these records after the fact can be time consuming and expensive, they say.
A few misconceptions that Robb and Carman have encountered with their clientele include, during divorce proceedings (even if the proceedings are lengthy) neither party is legally required to leave the family home if the home is a marital asset, Robb said.
Also, even if a court divorce decree allocates responsibilities for debts between the parties, that allocation does not prevent creditors, including taxing authorities like the IRS, from collecting debts from either or both parties (without regard to the divorce decree allocation), Carman said.
For more information about how bankruptcy can affect a divorce settlement, please call Warnock, MacKinlay & Carman, PLLC, at (928) 445-8056, or stop by their historic offices at 246 S. Cortez St. in downtown Prescott.