Rhode Island Divorce and Family Law Attorney | Attorney Christopher Pearsall

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

Call (401) 632-6976 Now for your low-cost consultation.
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Copyright 2008.  Christopher A. Pearsall, A New Rhode Island Divorce Lawyer for a New Millenium

*The Rhode Island Supreme Court licenses all attorneys in the general practice of law.
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Rhode Island Divorce Lawyers Tip: Divorce History a Help!

Originally the Rhode Island Family Court and divorce proceedings were part of the Rhode Island Superior Court.  Though they remained a court of superior jurisdiction, the Family Court was created to address family related matters which in and of themselves comprised a substantial number of cases focused on the specific subject of legal matters dealing with relationships, the well-being of the family unit and contracts such as marriage.

Seeing the need for a separate court to address divorces and relationships which resulted in contract-like situations, the RI General Assembly established the Rhode Island Family Court system and its underlying structure.

It is helpful and important to know that Rhode Island Divorce lawyers often deal with very emotional issues for their clients because with marriage often comes divorce - the severing of the living situation, financial dependencies the parties have with each other, the children borne of the marriage, and the assets and debts accumulated during the courts of the marriage.

It is extremely help however to understand that the RI Family Court system arose out of the Superior Courts due, in large part, to the contractual nature of marriage.

A marriage, though not viewed by many people as such, is in fact a contract.  During that contract children may be born, assets may be acquired, debts may be accumulated and one of the parties may need financial assistance to survive the dissolution of the marriage contract.

Do you want to get through your divorce and move on with your life as quickly as possible?  Then as difficult it is, put aside your emotions and think about where the judge is sitting and what he or she must do.

Imagine your case the way the judge does.  The judge sits there day in and day out hearing all kinds of saga, including emotions, hard luck stories, bitter retorts, vindictive statements, heartfelt pleas to punish the other spouse and more.  Yet the judge isn't there to be your counselor or to take the court's time so that you can say your piece just to get it off your chest and feel somewhat better just for having said it.

The judge sits on the bench in a divorce case to help the parties reach an equitable result to the dissolution to your marriage contract.   

Think about the judge's role and take the most direct result to the resolution of your divorce that is fair and reasonable or that is acceptable to you.

While the judge sits on the bench he or she has a specific role, namely to identify and deal with the important aspects of what your marriage produced.  Usually it is fairly straightforward.

1)  Minor Children
2)  Marital Assets
3)  Marital Debt
4)  A Spouse's ability to financially survive after the divorce.

While it is true that each of these items has each of its own characteristics, a divorce can reasonably be converted down into these four (4) basic elements for the purposes of understanding how you can help yourself through it.

This is simply a practical tip that will help any party to a divorce, IF, you can do it. 

1)  Put your emotions of rejection, anger, feelings of fault, depression, and all other emotions about your relationship away as much as possible when dealing with your Rhode Island Divorce Lawyer.  Why?  Because lawyers address the legal issues the court will rule on and unless they have counseling training for mental health issues, they are not the best ones to voice those concerns too.

I am not recommending that you bury your feelings or that you don't deal with them at all.  I am suggesting that you find a good psychologist, psychotherapist, individual counselor, family counselor and/or marriage counselor and talk them out, whether they be feelings about your spouse's infidelity or your own insecurity or fears.  Your emotions should be dealt with by a professional skilled in mental health and emotional issues.

2)  Focus on what the judge must deal with in your marriage.  Those are the four points I have listed above.  These are at the center of your Rhode Island divorce.   If you can remove the emotion from these points and focus on them in the order they are listed and decide upon them in the order in which they are listed then you will have the best opportunity to resolve your divorce as quickly and and effectively as possible to move on with your life.

The Rhode Island family courts are not a forum for waging vendettas and punishing your spouse for the wrongdoing you believe he or she has committed that have caused you to feel hurt or embarrassment.  Move on with your life sensibly and maintain your self-respect and dignity.  In this way, your life will grow and be enhanced much more quickly.

Life is all about change but not all change is bad.  Divorce is a big change for spouses and for children but it need not be a bad change.  Divorce is not only an ending of something you are familiar with, it is the beginning of something new, a great adventure that may bring you untold happiness without measure.

Embrace it and Live for You!

Authored By:

  Christopher A. Pearsall
RI Divorce and Family Lawyer
70 Dogwood Drive, Suite 304
West Warwick, RI 02893

Call (401) 632-6976 Now for your low-cost consultation.
from
Rhode Island's Most Affordable Divorce & Family Law* Attorney
now
100% Digital and Virtual!

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

*The Rhode Island Supreme Court licenses all attorneys in the general practice of law.
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Rhode Island Marriages and Engagement Rings

Engagement rings in Rhode Island Divorce proceedings are not typically a source of contention between the spouses.   Typically an engagement ring is not considered a marital asset. Therefore it is not subject to the Rhode Island family court's power of equitable distribution (i.e. power to divide the marital portion of assets between the divorcing parties).  In fact, the vast majority of cases where the wife's engagement ring is seriously debated occurs usually when the engagement ring has a substantial value and something changed about to the ring after the marriage.

The theory is understandable.  A marriage is a contract though it is seldom seen in that light by the parties.  For instance, when a man asks a woman to marry him and offers an engagement ring, the ring is the consideration for one contract.  In that case, the man is asks the woman to marry him and offers the ring to essentially "seal the deal" so to speak.  However, it then falls to the woman to decide if she will say "yes" and accept the offered ring.  If the woman says "yes" and accepts the offered ring, then a contract has been formed.  The man has made and offer and in return for that offer has asked for a promise that she will marry him and an acceptance of the ring.

Let's assume that the man no longer wants to marry the woman and changes his mind.  The man has now broken the engagement contract.  If he demands the ring back, the woman has no obligation to return the ring so long as she has still been prepared to marry the man and hold up her end of the "bargain."

However, if the woman no longer wants to marry the man and changes her mind, she is obligated to return the ring because she has broken their engagement contract and she is generally not allowed to profit from her own breach of the engagement contract which is exactly what would occur if she were to break the engagement contract AND keep the man's offered ring as well.  If it were otherwise, this would lead to women accepting men's proposals just to get the ring and not because they even intended to marry the man and simply tell the man she has changed her mind shortly thereafter and keep the ring.

When a marriage occurs, it is a separate and distinct contract made at the time of the ceremony where both parties perform as they promised rather than simply exchanging an offer for a promise.  In that case the wedding rings themselves seal that contract of marriage as well as the promises they make to each other for the duration of the marriage. 

Therefore, if nothing happens to the engagement ring during the marriage, it should be considered pre-marital or at least non-marital in nature because it existed and belonged to the woman before the marriage contract was formed.  Thus, it should not be within the power of the Rhode Island Divorce and Family Court to distribute it.  It was the woman's property before the marriage and simply wearing the ring during the marriage does not make it marital in nature.

The issue arises when something happens to the ring during the marriage.  Consider for example that a stone in the ring becomes chipped and as a result it loses value.  Let's say that marital income from either the husband, wife or both is used to purchase homeowner's insurance.  Now, if an insurance claim is made for the damage to the ring and funds received from that claim are used to replace that stone (i.e. diamond, etc. . ) now, marital funds have been used to repair or replace a part of the ring.  Once marital funds are used in any way on the ring, the previously pre-marital ring now is commingled with marital income (which is a marital asset) and they now convert the character of the ring from pre-marital to marital.

Other arguable examples that would change the ring to a marital character are:

1)  Adding new stones using marital income.
2)  Fixing the setting using marital income.
3)  Pledging the ring as collateral for something marital being purchased as a couple.

Authored By:

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

Call (401) 632-6976 Now for your low-cost consultation.
from
Rhode Island's Most Affordable Divorce & Family Law* Attorney
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100% Digital and Virtual!

Copyright 2008.  Christopher A. Pearsall, Internet Entrepreneur and Attorney-at-Law

*The Rhode Island Supreme Court licenses all attorneys in the general practice of law.
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Premarital Assets in a Rhode Island Divorce

How does my Rhode Island Divorce Judge determine if something is a pre-marital asset and why is that important?

It is perhaps easiest to answer your second question first.  The nature or type of asset that is presented for the judge's consideration is important. 

Why?   Certain types of assets may not fall within what is referred to as the "marital estate."  Rhode Island Domestic Relations law provides that the family court judge has the power to make an equitable distribution of "the marital estate."  Assets that are determined by the judge to be pre-marital are not themselves part of the marital estate and therefore are not subject to division by the court.  They are considered the property of the person who owned the asset prior to the marriage.

The family court judge will determine if the particular asset before him or her is a pre-marital asset based upon the factors surrounding the asset.  Each judge will use his or her discretion to consider questions similar to these:

• Who owned the asset prior to the marriage?
• Does the other party contest that the asset is pre-marital?
• What documents exist to show ownership prior to the marriage?
• What kind of asset is it (i.e. vehicle, piano, painting)?
• How was the asset used during the course of marriage?
• Where was the asset kept during the course of the marriage?
• Was the asset kept completely separate and apart from the marital estate?
• Did both spouses have the beneficial use and enjoyment of the asset during the marriage?
• Were there any discussions between the parties or representations made by the party now claiming it is pre-marital either immediately before of during the marriage that related to the asset?  What were the substance of those discussions or representations?
• Did the asset appreciate during the course of the marriage?
• Were any marital monies or other marital assets used for the maintenance, storage, upkeep or improvement of the asset during the course of the marriage?
• Is the asset insured, and if so, who is the policy holder and who are the beneficiaries?
• If the asset is insured, were any marital assets used to pay the insurance premiums?
• What is the value of the asset?
• How long have the parties been married?

There are countless questions a Rhode Island family court judge may weigh in considering whether  an asset is pre-marital or not.  The answers to these questions and the level of proof that can be offered in support of those answers will help the judge make a determination as to whether the asset is truly pre-marital.

It is unwise for a party in any divorce to assume that simply because he or she owned an asset prior to the marriage that it is automatically pre-marital.

The reason for this is that there are other principles of law that exist that set forth that actions taken by either parties regarding a pre-marital asset can easily and even accidentally convert it into a marital asset.

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.)