Rhode Island Divorce and Family Law Attorney | Attorney Christopher Pearsall

Two Benefits to Having a Marital Settlement Agreement by RI Divorce Attorney Christopher Pearsall

If you had the choice of having an easy uncontested Rhode Island divorce and a difficult mess of a divorce, which would you choose?

I would like to think that you would choose an easy uncontested Rhode Island Divorce because I prefer to think that as a reader of this blog you have a lot of common sense and you would rather see things go smoothly instead of roughly.

There are two benefits that divorcing spouses should be aware of on a practical level.

If you don't understand what a Rhode Island Marital Settlement Agreement is, then here it is in a nutshell.

Rhode Island Marital Settlement Agreement (MSA) 

A Marital Settlement Agreement (MSA) is a written contract which is entered into and signed by both parties and contains all the items you and your spouse agree upon regarding the manner in which you are going to dispose of your marital estate (your marital assets and debts) and usually includes all the specific agreements you and your spouse have made to provide for your Minor Children.

A successfully drafted Marital Settlement Agreement that is signed and executed by both spouses to a divorce creates two specific benefits for the spouses.

First, a well-drafted Marital Settlement Agreement allows the attorneys to quickly authenticate the MSA by the testimony of the spouses and ask that the court accept it and approve it as a full exhibit.  

Assuming this is successful, the MSA eliminates the need for the judge to hear countless pages of details and conditions about all the assets, debts and considerations for the children, except those provisions in the Marital Settlement Agreement that are required to be placed on the record of the family court because they relate directly to the well-being of the Minor Children, Healthcare directives of the parties, and provisions regarding Alimony.  This, of course, saves the spouses considerable time on the witness stand and makes the proceeding flow much more quickly.

Second, many experienced Rhode Island Divorce Attorneys charge different rates for time spent preparing for a case and time spent "in court."  Time spent "in court" is usually more expensive.  Therefore, the shorter your uncontested hearing, the less money you will spend on the actual proceeding simply because you used a Marital Settlement Agreement.

Other benefits will be discussed in subsequent articles, including problematic issues and how they might best be addressed.

Authored By:

Christopher A. Pearsall, Attorney-at-Law

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In a Rhode Island Divorce is Dividing a Vested Pension within the Rhode Island Family Court's Power?

Sometimes Rhode Island divorce lawyers aren't able to provide "definite" answers to legal questions, including pension issues.

This is one of those frequent instances.

The answer is, "It all depends."

If either party in a Rhode Island divorce has a pension then there are various issues you will want to consider.  Specifically, the divorce issue we want to address here is that of "vesting." 

You can find out if your pension is vested for the purposes of your Rhode Island divorce by contacting the administrator of your pension fund and simply asking if your pension if your pension is vested or not.  You also may want to asked your pension administrator when your pension will vest (become vested) just in case the date might occur during the course of your Rhode Island Divorce proceeding.

ISSUE

The Rhode Island family court judge only has the power to order the equitable distribution of marital assets, including pensions. 

If you or your spouse has a pension that is not vested, what part of the pension, if any, is subject to the Rhode Island family court's power of equitable distribution?

If you or your spouse has a pension that is vested, what part of the pension, if any, is subject to the Rhode Island family court's power of equitable distribution?

ANSWERS

The only part of a vested or unvested pension that is subject to equitable distribution/division by the Rhode Island Family Court Judge is the "marital portion" of the pension.

The marital portion of any pension is dependent upon various circumstances, including (1) the length of the marriage, (2) the type of pension (civilian or military) and the laws governing it, and (3) whether the pension is vested or not.

While it may be the Rhode Island family court judge's role to determine after trial what the marital portion of the pension may be, it is the job of each spouse and his or her divorce lawyer to present to the court what part of the pension is the marital portion.  Sometimes your divorce lawyer may be able to argue that a larger portion of the pension is actually the "marital portion" if it is to your benefit to do so.  However, if there is disagreement between spouses and/or their divorce lawyers regarding the true manner in which the marital portion should be calculated, proof may be presented at trial.

Proof of the marital portion of the pension that is subject to distribution by the Rhode Island family court may require expert testimony by way of an actuary who substantiates the basis for claim and the amount of it.  Without this information, your Rhode Island divorce judge may not have sufficient information for determining the basis, amount or validity of your claim on that pension.

The issue of whether a pension is vested or not is of substantial benefit to both spouses, the court and an actuarial expert if one is necessary. 

If the pension has not vested at the time of the entry of the Final Judgment of divorce, then the pension payments themselves are not subject to distribution in the future.  Since the pension is not vested then the body (corpus) of the pension is only made up of the contributions made to the pension.  There is no entitlement to the benefits of the pension after it vests simply because a spouse may have an entitlement to a portion of the monetary contributions to the pension.

If the pension is vested prior to the entry of the Rhode Island Family Court's Final Judgment of Divorce, then the benefits of the pension itself provided by the "vesting" of the pension during the marriage are subject to distribution of the Rhode Island family court.

Thus, the family court's distribution power in Rhode island in a divorce proceeding is limited to either (1) the financial contributions made to the pension when it has not vested prior to the entry of Final Judgment of Divorce, or (2) the benefits provided by the pension when it has vested prior to the entry of Final Judgment.

Authored By:

Christopher A. Pearsall
Attorney-at-Law
70 Dogwood Drive, Suite 304
West Warwick, RI 02893

Call (401) 632-6976 Now for your low-cost consultation.
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Rhode Island's Most Affordable Divorce* Lawyer & Family Law* Attorney

Copyright 2008.  Christopher A. Pearsall
A New Rhode Island Divorce Lawyer for a New Millenium!

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Can my RI Divorce Lawyer Save My House?

RI Divorce Lawyer Question:

    For the sake of this question I'll call myself William.  I have a 401k that I began 10 years before I got married.  It had about $75,000 in it before Tammy and I got married.  We've been married for the past 13 years and my 401k is up to about $285,000.  I'm concerned about being able to pay my attorney's fees.  I'm also concerned because I want to keep the house my wife and I live in.  The house has been in our family for generations.  I don't think I can get a loan to buy out my wife's interest in the house because my credit isn't so good.  We have about $140,000 in equity in the house.  What can I do to save my house?  One attorney has told me that Tammy will get 1/2 of my 401k and that I can't touch my 401k monies while the divorce is pending.  This doesn't seem fair.  It looks like I'm going to lose 1/2 of everything I built.  I know Tammy is entitled to part of everything but it seems like I'm being left with no options but to lose the house and 1/2 of my 401k.  Is there anything I can do here?

    - William  (Coventry, RI)

RI Divorce Lawyers Answer:

    William, I can tell you that you have more options than you may think.  Ultimately, your 401k plan is the key to resolving your difficulties.  A 401k if much more versatile than a pension, annuity, IRA or any other investment vehicle. 

    First, Check with your 401k Plan Administrator.  Ask whether you are allowed to take a loan up to a certain percentage of your vested 401k balance.  Then confirm the amount of your vested balance and the allowable loan that you could take from your vested balance.  Loans on 401k plans are typical and are usually limited to 50% of your vested balance.

    For the sake of example let's assume this is a typical 401k plan and you can take a loan of up to 50% of your vested balance.  Based upon the numbers you have provided, I would be willing to venture a guess that you may be told that the entire $285,000 is vested and that your maximum allowed loan at 50% would be limited to $142,500.  You should also find out how much interest will be charged on whatever loan you take out and the maximum repayment period.  Of course you will be repaying yourself the interest so this is a considerable benefit to you.  Plus, you can check with your accountant to see if any of the 401k interest is potentially deductible because it is used as a buyout of your wife's interest in the real estate and adds to your adjusted basis in the property.

    Now William, there are a few things to take into consideration but careful planning will eliminate difficulty.  If you are already in the midst of a divorce then your are bound by the Automatic Orders of the Court.  These Orders prevent you from spending, hiding or doing anything out of the ordinary with any assets without the written consent of your spouse.  You may not unreasonably incur any debt that is not in the normal course of your home or running your business except for paying your attorney's fees.

At the outset this looks like it poses a massive hurdle but your case is a bit different.

The Rhode Island Family Court has the power of equitable distribution over the marital estate.  This means the marital assets and debts of the parties.  This does not include pre-marital assets.  You have already disclosed that your 401k had a value of $75,000 before you got married.  This $75,000 is a premarital asset.  These funds are yours.  Additionally, any appreciation relating solely to those $75,000 is also a non-marital asset because they are funds generated purely by virtue of a the pre-marital asset without further contribution from the parties.  Thus if over the 13 years if your 401k averaged 7% per annum return then your $75,000 has roughly appreciated to $180,738.38 making the marital portion of your 401k $285,000 minus $180,738.38 which equals $104,261.62.    The $104,261.62 should roughly be the true marital portion for distribution by the Rhode Island Family court.  It is certainly viable for you and your attorney take the position that this should be undisputed and that $180,738.38 is truly a premarital asset to which your wife is not entitled. 

If you are allowed a 50% loan to vested monies then you have in excess of $90,000 that you can take as a loan for both your attorneys' fees and to buy out your wife's interest in the house.  If your wife's share of the house equity is agreed to be $70,000 then even with poor credit you should be able to secure an equity line of credit or a refinance of the house even if you take out a loan of $40,000 and put $35,000 toward the house and rely upon $35,000 of the house equity to balance out the loan.  This also leaves you with an additional $5,000 for attorneys' fees.

If you take out a loan of $35,000 as suggested, then you still have $145,738.38 that should remain a pre-marital asset that you are entitled to claim as a pre-marital asset.

Keep in mind that this is an arguable position.  Technically, it is a judge's role to determine whether an asset is marital, non-marital, premarital or otherwise exempt from the court's equitable distribution power.  However, when the issue is as clear cut as this in accordance with the statutes, most judges will not penalize an individual for following the advice of his attorney in order to settle a matter on the judge's calendar.

If the judge disapproves of the manner in which you proceed and finds the circumstances to require the court's authority, the most likely conclusion is that the Judge will consider any disproportionate amount as an offset to your spouse against the marital estate.  However, pursuant to the Rhode Island General Laws this is an arguable position that you should be able to take and use without the written permission of the other party or an order of the court, especially if it is used in an effort to settle the case. 

However, if the funds are used for purposes other than settling the case, be prepared for the court to take more appropriate actions to punish you as an abusing party even if you are within your legal rights.

Authored By:

  Christopher A. Pearsall
Attorney-at-Law
70 Dogwood Drive, Suite 304
West Warwick, RI 02893

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Rhode Island Divorce Question: Engagement Ring

Question:

My husband gave me a $20,000 engagement ring when he proposed to me.  It's the original ring he gave me and no changes have been made to it.  We are now getting divorced in Rhode Island.  Is my engagement ring part of the marital estate.  My husband says I owe him $10,000 from my ring.

Answer:

Based on what you have included in your question, your husband is incorrect.  Your engagement ring should not be included in the marital estate and should not be considered by the family court judge in equitably distributing the marital estate.  An engagement ring was a gift from your future husband to you in exchange for your promise to marry him.  You married him and therefore your engagement ring was a gift that existed before your marriage.  If you had broken your promise of marriage and had not married your now husband you would have had to return the ring to him.  Under these circumstances however, the engagement ring should be considered your separate property.

 

Authored By:

  Christopher A. Pearsall, Esquire
70 Dogwood Drive, Suite 304
West Warwick, RI 02893


Call (401) 632-6976 Now for your low-cost consultation.
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Copyright 2008.  Christopher A. Pearsall, Attorney-at-Law

*The Rhode Island Supreme Court licenses all attorneys in the general practice of law.
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Rhode Island Divorces | How to save up to $3,000!

I've previously written Rhode Island Divorce articles about civility and trying to work with your spouse to resolve your issues.  What I didn't mention in those other divorce articles is that by remaining civil, holding your temper and keeping a cool head is that it can save you a hefty sum of money.

One of the most time consuming parts of any divorce is reaching a Marital Settlement Agreement.  A Marital Settlement Agreement is typically a document that embodies all the terms of what you and your spouse have agreed to and it anticipates what could happen in the future, to the extent that reasonable changes can be foreseen and prepared for. 

Assume that your attorney in this example costs $200 per hour and it takes him or her 4 hours to draft and re-draft the complete Marital Settlement Agreement which includes provisions to protect you and provisions to specify which states laws apply, etc....  That's $800 you would save if you just came to an agreement with your spouse, wrote out all the terms and conditions and you both signed it before a notary public and then testified at the hearing that your signature is genuine, that you signed it freely and voluntarily and that it is fair and equitable. 

Now, 4 hours is a minimal amount of time to prepare a Marital Settlement Agreement which goes back and forth between the other attorney for changes, additions, removals, etc.... So when I say 4 hours, I am giving you an almost unrealistic figure.  In fact, if it's to be properly detailed and is prepared by an attorney then the attorney is going to try to anticipate anything and everything that could affect you in the future so the attorney is likely to take a good 10 hours on the Marital Settlement Agreement.  Now what if your attorney charges $300 per hour but you and your spouse come to your agreement on your own.  You just saved a whopping $3,000 on legal fees. 

Now here is a question you can easily answer.  Would you rather keep a cool head, be reasonable with your spouse and reach an agreement to hang on to that money or give it to a Rhode Island divorce attorney?

Authored by:

Christopher A. Pearsall, Esquire
PEARSALL LAW ASSOCIATES
571 Pontiac Avenue
Cranston, RI  02910
Phone:  (401) 354-2369

Attorney Pearsall's practice is focused almost exclusively in the areas of Divorce and Family law.

CALL (401) 354-2369 now to schedule for your low-cost, no obligation legal consultation!

NOTE:  The postings on this website are NOT legal advice, DO NOT create an attorney/client relationship and are NOT a substitute for a detailed consultation with an attorney experienced in the state where you have your legal issue.  This site is based on Rhode Island and is presented for the convenience of the internet public.

* The Rhode Island Supreme Court licenses all lawyers in the general practice of law and has no procedure for recognition of specialty in any area of law.

Copyright 2008 - Christopher A. Pearsall and Pearsall Law Associates (All Rights Reserved.)

Help Rhode Island Divorce Attorney Christopher Pearsall Save You Money!

You can help your Rhode Island Divorce Attorney immensely by providing information at the very beginning of your representation. The information I find most valuable as a Rhode Island Divorce Attorney is the following:

• Name and Description of Each Asset?
• Current Value of Each Asset?
• Who Purchased the Asset?
• Whose Name is the Asset Held In?
• Where is the Asset Located?
• Was this asset given to you or your spouse as a gift or inheritance?
• If so, who as the asset given to (your or your spouse) when and why?

• Name of Each debt?
• Person or Company to Whom the debt is Owed?
• The Account Number for the debt?
• The existing balance of the debt
• Who created the debt?
• When was the debt first created?
• What were the monies used for?
• Who used what monies that make up the debt?

• Do you have children?
• How many children do you have with your current spouse?
• Do you have any adopted children?
• What are the children's names and dates of birth?
• Where do the children live?
• Who is the primary physical caretaker of the children?

• When were you married?
• Where were you married?
• Are you still living in the same household?
• If not, when did you separate and why?
• Do you have evidence of infidelity of your spouse?

• Identify your employer's name and address?
• What is your job, and what are your job duties?
• How long have you worked with this employer?
• How much do you make per week?
• Do you receive any overtime?
• If you receive overtime, how much do you receive?
• Is your overtime regular?  (weekly, biweekly or monthly)

• Identify your spouse's employer's name and address?
   
• What is your spouse' job, and what are your spouse's job duties?
   
• How long has your spouse worked with this employer?
• How much does your spouse make per week?
• Does your spouse receive any overtime?
• If your spouse receives overtime, how much does your spouse receive?
• Is your spouse's overtime regular?  (weekly, biweekly or monthly)

        Give a thumbnail sketch of your educational background and the educational background of your spouse.

This information will be invaluable to your Rhode Island Divorce attorney as long as you really take time to brainstorm.  Remember that automobiles are assets but any financing for them is a debt.  Also, pensions, 401ks, investments, CD's, bank accounts are assets but loans against those retirement vehicles are debts.  A house is an asset but mortgages and equity loans against those items are debts. 

This is not to imply that you couldn't figure this out.  Yet there are some clients I've had over the years who have experienced frustration because they truly do not understand the nature of each question.  As an example, most clients will not put down their new television and surround sound system or their new dining room set as an asset because they just see it as furniture.  It's understandable and yet knowing these things is helpful to your attorney and to the court because they are things that may have to be divided between the spouses.

If you want to get a jump on things and help an attorney evaluate your case, then complete this list thoroughly and take your time. You'll find it's well worth it and it should save you money on attorney's fees in the long run.

Authored by:

Christopher A. Pearsall, Esquire
PEARSALL LAW ASSOCIATES
571 Pontiac Avenue
Cranston, RI  02910
Phone:  (401) 354-2369

Attorney Pearsall's practice is focused almost exclusively in the areas of Divorce and Family law.

CALL (401) 354-2369 now to schedule for your low-cost, no obligation legal consultation!

NOTE:  The postings on this website are NOT legal advice, DO NOT create an attorney/client relationship and are NOT a substitute for a detailed consultation with an attorney experienced in the state where you have your legal issue.  This site is based on Rhode Island and is presented for the convenience of the internet public.

* The Rhode Island Supreme Court licenses all lawyers in the general practice of law and has no procedure for recognition of specialty in any area of law.

Copyright 2008 - Christopher A. Pearsall and Pearsall Law Associates (All Rights Reserved.)

Rhode Island Divorce Attorney Pearsall - Questions about Investments

Investments can be both a frustrating and puzzling aspect of equitable distribution in a Rhode Island Divorce. In many instances only one spouse contributed to the investment account. As a result the primary or sole contributing spouse expects that he or she is entitled to the investment account without question. Yet in the context of a divorce this expectation may lead the contributing spouse to be very disappointed. When dealing with investment issues, underlying principles of equity will override what you may perceive to be common sense.

Consider this scenario and the questions it presents.

Carrie and James have been married for seventeen (17) years. James has always been concerned about having enough money for retirement so he opened an IRA (Individual Retirement Account) when they first married and contributed the maximum amount possible annually. The IRA has accumulated to approximately $93,000.

Carrie earns a decent income and opted not to open an IRA and she declined to participate in her company's 401k plan up until the last few years because she likes to spend money on high price shoes and designer clothes. Carrie has only accumulated about $4,500 in the plan.

Carrie meets up with her old high school sweetheart. One thing leads to another and Carrie has a one night affair that James discovers abruptly when he returns home a day early from a business trip.

James files a Complaint for Divorce in Rhode Island seeking an equitable distribution of all the marital assets and debts. Carrie files a Counterclaim for Divorce also seeking an equitable distribution of all the debts and assets and specifically seeking half (1/2) of James' IRA.

James feels betrayed and believes Carrie shouldn't get any of his IRA.

When James and Carrie go before the Rhode Island Family Court will it matter:

1.  That Carrie didn't contribute to James' IRA?

2.  That Carrie isn't the beneficiary on the IRA in the event of James' death?

3.  That Carrie's infidelity caused the breakdown of the marriage?

4.  That Carrie spent all the money she earned over the years while James saved a good portion of the money he earned?

5.  That James is not asking for any of Carrie's 401k?

Authored by:

Christopher A. Pearsall, Esquire
PEARSALL LAW ASSOCIATES
571 Pontiac Avenue
Cranston, RI  02910
Phone:  (401) 354-2369

Attorney Pearsall's practice is focused almost exclusively in the areas of Divorce and Family law.

CALL (401) 354-2369 now to schedule for your low-cost, no obligation legal consultation!

NOTE:  The postings on this website are NOT legal advice, DO NOT create an attorney/client relationship and are NOT a substitute for a detailed consultation with an attorney experienced in the state where you have your legal issue.  This site is based on Rhode Island and is presented for the convenience of the internet public.

* The Rhode Island Supreme Court licenses all lawyers in the general practice of law and has no procedure for recognition of specialty in any area of law.

Copyright 2008 - Christopher A. Pearsall and Pearsall Law Associates (All Rights Reserved.)

Rhode Island Divorce Attorney Pearsall - Equity Loans as Marital Debts

Equity Loans are very similar to mortgages. Usually they are loans secured by something of value, traditionally a peice of real estate that is worth more than the loan being taken out. A mortgage for an equity loan is typically recorded and though it can be a first mortgage on the property, it is often a second mortgage.

Equity loans can also be extended upon other collateral of value, such as bonds, stocks, valuable business equipment, jewelry and the like.

Fred has been married to Rachel for 26 years. Over the years they have accumulated a nice house along the water which is paid off. Fred has a 22 Foot Scooner that has a galley kitchen and sleeps six (6). Rachel has four (4) collectible fur coats that she has kept in mint condition and lots of diamond jewelry including necklaces, anklets, bracelets and rings that she only wears for special occasions.

Fred has kept the finances, but he hasn't done it very well and after he and Rachel retire, he realizes they have no liquid cash coming in to sustain their lifestyle.

Fred panics as Rachel tells him she's going shopping at Carte Blanche. Scrambling to figure out what to do Fred finds the deed to his schooner and grabs the three most valuable peices of jewelry that he bought for Rachel.

While Rachel is gone Fred runs out and has the jewelry appraised and gets a value assigned to his Scooner. Fred then runs down to Focus One Finance and applies for a loan by pledging the equity in the jewelry and his schooner. Focus One Finance holds the title to the schooner and records a lienholder statement against it. Focus One Finance also holds the jewelry and tell Fred that he'll get all of this back when he satisfies his Equity Loan terms. Focus One Finance wires $85,000 to Fred's bank just in time for Rachel to make a purchase with her MasterMoney Card.

Fred rushes back home feeling that he has put an end to the crisis.

Two weeks later Fred gets his first Equity Loan Statement. He doesn't want to pay it out of the monies he got so he puts it in a drawer. A month later another statement comes with a double payment due and penalty fees. Again Fred stuffs it in the drawer, not wanting to deal with it at this time.

Finally in the third month Fred knows he can't avoid this anymore, but rather than pay the statement he waits until Rachel is out of the house and he takes her two best fur coats and runs down to Focus One Financial. At first Fred offers them as payment and tells Focus One that the fur coats are worth much more than the payments due, but Focus One Financial wants payment ...they do not want to barter. Financial Focus One states that the best it can do is re-finance his loan and capitalize the interest and penalties and hold the garments as additional collateral since he did not make the first three payments. Fred agrees and returns home.

A week later Fred and Rachel are invited to a formal dinner event. Rachel immediately notices that several of her best peices of jewelry are gone and so are her fur coats. Rachel insists on calling the police but Fred urges her to keep looking. After about an hour, Fred breaks down and tells Rachel the whole story. Rachel is furious! She demands that he go right down and get her furs and her jewelry back immediately. Fred goes to Focus One Financial but they will not release the items until he fulfills the Equity Loan. Fred checks the checkbook. There is only $5,300 remaining in the account. Fred goes back and checks all the entries and they are all purchases that Rachel made for herself.

Fred returns to explain to Rachel why he can't get the items back. Rachel quickly packs a suitcase, takes her debt card and their check book and leaves.

The next afternoon Fred is served with divorce papers. Fred goes down to the bank to get some monies to hire an attorney. The ATM gives him $300 and then says $0 balance. Rachel had withdrawn the other $5,000, presumably to hire her attorney.

How might this mess be dealt with by the Rhode Island Divorce Court?

Fred didn't tell Rachel about the equity loan. Is Rachel likely to be held responsible for the equity loan given that circumstance?

Fred pledged Rachel's jewelry and fur coats as collateral against the equity loan. In the divorce proceeding could Rachel get them back from Focus One Financial without paying off the equity loan?

Rachel used up virtually every dime of the equity loan money. Even if Rachel didn't know where the monies came from, might she be held responsible for the loan as well since she received the benefit of the monies?

Is the Equity Loan a marital debt such that the Rhode Island Family Court has the power to determine its apportionment and assignment, or does Fred's conduct in deceiving Rachel render this his own private debt?

There are three (3) other issues (Questions) in this case that you should spot.  Can you see them?

Authored by:

Christopher A. Pearsall, Esquire
PEARSALL LAW ASSOCIATES
571 Pontiac Avenue
Cranston, RI  02910
Phone:  (401) 354-2369

Attorney Pearsall's practice is focused almost exclusively in the areas of Divorce and Family law.

CALL (401) 354-2369 now to schedule for your low-cost, no obligation legal consultation!

NOTE:  The postings on this website are NOT legal advice, DO NOT create an attorney/client relationship and are NOT a substitute for a detailed consultation with an attorney experienced in the state where you have your legal issue.  This site is based on Rhode Island and is presented for the convenience of the internet public.

* The Rhode Island Supreme Court licenses all lawyers in the general practice of law and has no procedure for recognition of specialty in any area of law.

Copyright 2008 - Christopher A. Pearsall and Pearsall Law Associates (All Rights Reserved.)