Family Law

Heir Today, Gone Tomorrow

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Many of my clients ask me if the money they have inherited during a marriage is “off the table” in a divorce. This can be a complicated question, and I often reply, “It depends.”

The general rule in Oregon is that inherited or gifted assets to one spouse during a marriage are not subject to the presumption of equal contribution by the other spouse in a divorce. The exception to this general rule is if a judge determines it would be “just and proper under all the circumstances” to put it back on the table, then it may be divided between the spouses in a divorce.

Let’s break this down with some examples.  If Spouse A inherits $100,000 and deposits the funds in an individual account only in Spouse A’s name, then these funds will, in most cases, be considered the separate property of Spouse A in a divorce from Spouse B.  Meaning, they remain “off the table.”  However, I said, “It depends.” In other cases, for example, where Spouse A transfers the funds to an account held with Spouse B, then those jointly held funds have now become marital assets and subject to a 50/50 division in a future divorce.  Another example is where Spouse A takes the $100,000 and purchases a home with Spouse B where both are on title.  Spouse A has now effectively commingled her $100,000 down payment with Spouse B.  If the parties divorce in the future, then Spouse B is likely going to be entitled to 50% of the home equity including the benefit of any equity created by Spouse A’s $100,000 down payment.  It is difficult to anticipate under which set of circumstances a judge might award Spouse B a share of Spouse A’s inheritance if Spouse A kept it separately from Spouse B continuously throughout the marriage.

Each case is decided on its particular facts. The moral of this story is you should never commingle any inheritance you may receive during a marriage without understanding the legal impact of such a decision. Keep it separate until you can consult with an attorney who can advise you before making costly mistakes you may not be able to reverse.

Gray Divorces – What are they and do I need one?

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The term “gray divorce” has been trending for the last few years.  It is a popular term, and not a legal one. It relates to couples who have been in long term marriages and who discover in their later years that they just don’t want to be married to their spouse any longer. These divorces have been on the rise in my practice since coming out of the pandemic. Clients have shared that sitting in isolation for those many months allowed them to consider changes in their lives and what that would look like for themselves, their soon to be ex-spouse, and perhaps their adult children who have since left the nest.

Gray divorces are not to be taken lightly. There are serious financial issues to consider when contemplating divorce in your 50’s and later.  Many of my clients have done well saving for retirement and strategic tax planning and gifting throughout their marriage. In any divorce, gray or not, the collective bucket of money is divided and what was one set of household expenses is soon doubled.

Divorcing later in life carries its own unique considerations. Typically, retirement savings are divided in half, the marital residence which might finally be paid off is likely to be sold, and the tax planning benefits you may have had as spouses go away.  Current interest rates continue to be high; so even if you aren’t selling the house, one of you will still need a place to live.  For example, are you the one buying a new home and incurring a 15 or 30 year mortgage with an interest rate above 6% at age 55?

As in any divorce, it is important to know your rights, and understand the financial and emotional impacts it may have before you decide which way to go at the fork in the road.

– Christine Costantino

 

 

It’s Okay to Say, “I Don’t”

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Kelly Bensimon, star of the ‘Real Housewives of New York City,’ recently called off her wedding to Scott Litner after he refused to sign a prenuptial agreement. Bensimon understood the legal protections that a prenuptial agreement would offer her and her children, and refused to marry without those protections in place.

If a prenuptial agreement is right for you and your soon-to-be spouse, be sure to allow enough time to get a prenuptial agreement prepared prior to your wedding. There are three main challenges that can invalidate a prenuptial agreement. First, each party must be represented by their own attorney and be advised of their rights, and the rights they may be giving up, or gaining, by entering a prenuptial agreement. Second, both parties need to fully disclose all of their assets and debts to each other so they both understand what they may be giving up, or protecting. Third, the prenuptial agreement must be drafted with enough time for each party to meet with their own attorney, understand their rights and responsibilities, and voluntarily sign the agreement well ahead of the wedding.

You cannot get a prenuptial agreement after you have wed. So, if you are the party who wants the prenuptial agreement and your betrothed won’t sign, then don’t be afraid to say “I don’t.”

– Chris Constantino & Jos Strauss

Supreme Court Upholds Protection for Domestic Violence Victims

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Supreme Court

On June 21, 2024, in United States v. Rahimi, the U.S. Supreme Court upheld a federal statute prohibiting individuals subject to domestic violence restraining orders from possessing a firearm. This ruling limited the scope of a Supreme Court decision in 2022—New York State Rifle and Pistol Assn., Inc. v. Bruen—that expanded gun rights in situations where a criminal defendant is considered dangerous. Now, courts may uphold gun laws that do not have a direct historic analogue. Most significantly, this ruling disarms people who are known to be dangerous to those they are closest to.  Research shows that the risk of a homicide increases by 500% if a gun is present in a domestic violence situation. The Supreme Court’s decision preserves important protection for some of society’s most vulnerable people.

-by Chris Costantino & John Wuest

The CARES Act & Divorced or Separated Parents

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“Perhaps due to the speed with which the law was passed, the Act is silent on how it will distribute the rebate money to parents who are divorced or separated.”

On March 27, 2020, Congress passed the CARES Act, a sweeping piece of legislation aimed at providing relief to individuals, families, and businesses adversely affected by the Coronavirus pandemic. The Act will have different repercussions for individuals in different circumstances, but the provision with perhaps the broadest impact is the recovery rebate. More commonly referred to as a stimulus payment, the recovery rebate is a one-time payment to US citizens and residents. For most the recovery rebate is good news, but for unmarried, divorced, or separated parents sharing custody of their children, the rebate may usher in unwelcome complications.

Individuals who make less than $75,000 will receive $1,200 plus $500 for each child that qualifies for the Child Tax Credit. However, many parents who share equal parenting time with their children alternate which parent claims the Child Tax Credit from year to year. Perhaps due to the speed with which the law was passed, the Act is silent on how it will distribute the rebate money to parents who are divorced or separated.

The recovery rebates are based on taxpayers’ 2019 tax return (or 2018 for those who have yet to file their 2019 return). The most likely result is that the parent who claimed the children in 2019 will receive the additional money for their qualifying children. This payment is a fully refundable tax credit, meaning it can be received by taxpayers regardless of what tax is owed. The rebates are technically a prepayment by the IRS of a 2020 tax credit; whichever parent claims the children in 2020 will have the rebate factored into their 2020 taxes. For parents who claim their children in alternate years, the tax rebate poses a unique problem that the IRS has yet to address. The parent who claimed their child in 2019 will probably receive the rebate if they have not already. However, the parent who will claim the child 2020 is also likely to receive the rebate after filing, if they did not receive it previously. What is unclear is whether the IRS will require the return of any overpayment, if not both parents may benefit from the stimulus.

The IRS may address this issue in future guidance, but we recommend that amicable co-parents be proactive in discussing how they will use the rebate money so that it can best benefit the child. A frank conversation about how to use the money may prevent disagreements in the future. While we encourage parents to reach out to their attorney with questions related to the rebate, it is likely that the cost of litigation to resolve this issue will far exceed the amount of the rebate.

Emily Clark Cuellar is a litigator at Samuels Yoelin Kantor. Her practice is centered around families, and her passion is helping families navigate all the various obstacles they may face. Her practice focuses on domestic relations and fiduciary and probate litigation.

A Pandemic Economy: Modifying Spousal or Child Support Awards

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Oregon’s unemployment rate has risen to a historic high of almost 15{45ef85514356201a9665f05d22c09675e96dde607afc20c57d108fe109b047b6} in the wake of the COVID-19 pandemic, leaving many in a state of uncertainty about how they will make ends meet. For those who are party to a child or spousal support award, a change in employment may be grounds for modifying the terms of their support award. When there has been a significant, unanticipated change in economic circumstances, the court will consider a petition to modify a child or spousal support award. You would be hard pressed to find anyone who anticipated the COVID-19 pandemic. If you have lost your job or are otherwise significantly impacted by the pandemic, you may consider requesting a child or spousal support modification.

Courts determine the child support awards using a formula based on the income of both parents as well as other factors. Because courts deviate from this formula only in extraordinary circumstances, parents who wish to modify their child support obligations should run the numbers to see if their change in income will result in a change to their child support award. The Oregon Department of Justice provides a useful calculator to help parents determine child support awards.

The guidelines for spousal support are less formulaic than those for child support. Courts will modify spousal support after a change in economic circumstances, if the modification supports the original purpose of the award. Some parties’ judgments do not specify the original purpose of the award. In those cases, the court will assume the award was based on an attempt to distribute the incomes of the parties fairly. The court may then modify the award if either party has a substantial change in income. However, if both parties have a substantial decrease in income, then the court will be less likely to modify the award because the relative position of both parties has stayed the same.

For both child and spousal support modifications the court has the authority to modify the award retroactively, but only to the date of a party’s modification request. This means if you were laid off in March or April and you do not file to modify until July, the earliest date the modification will be effective is July. Filing a motion as soon as you learn about a significant change in income is important because a retroactive award allows you to receive money for the time that motion is in court.

The first step to modifying child or spousal support is to file motion with the court and give notice to a co-parent or ex-spouse. Many courts in Oregon are currently closed or operating on limited hours due to the pandemic. If you are planning to file with your county court, you may wish to check the status of your court on the Oregon State Courts website. We encourage anyone interested in making a request for support award modification to consult an experienced family law attorney.

Emily Clark Cuellar is a litigator at Samuels Yoelin Kantor. Her practice is centered around families, and her passion is helping families navigate all the various obstacles they may face. Her practice focuses on domestic relations and fiduciary and probate litigation.

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