The title to today's post is taken from an episode of NBC's "The West Wing" that aired in June 2001. Whether you loved or hated the politics of that show, you cannot deny its penchant for giving viewers great Trivial Pursuit knowledge. In this episode, two members of the White House staff are cajoled into meeting with representatives of "The Organization of Cartographers for Social Equality."
At first, the staffers are visibly annoyed by having to take the meeting, but the map-makers quickly get their attention when they unveil a copy of the "Peters Projection World Map," which corrects centuries-old distortions in the familiar world map we all remember from grade school. For example, Greenland looks almost equal in size to Africa on most U.S. maps. In truth, Africa is 14 times larger. "What the hell is that?!" the White House press secretary exclaims when she sees the map. The cartographer smiles and replies, "It's where you've been living this whole time." (If you want to watch the scene, here's a link I found online - www.odtmaps.com/what_they_are_saying/west-wing.asp)
The press secretary in this scene feels a lot like many of my clients feel when I explain the principles of Equitable Distribution, or "ED."
ED is the statutory framework that tells courts how to identify and distribute marital property during a divorce case. The central idea is that all property you acquire while married, with a few important exceptions, is considered "marital" and is split 50/50 between the parties, unless good cause exists to make an unequal division.
Here are a few frequently asked questions that I answer in the majority of my consultations about Equitable Distribution:
1. Can my spouse touch my retirement? - Yes, indeed. Retirement benefits accrued during marriage, whether in a 401(k), IRA, or a traditional pension are marital property and are routinely divided in divorce cases. I am surprised by how many clients express shock at this answer. Couples save on the assumption they will be together when they retire, so why shouldn't those benefits be divisible upon divorce? Benefits are usually divided by using a special court order called a Qualified Domestic Relations Order. These orders are very technical and generally cost more to prepare, so I try to avoid using them if the opposing party can be compensated elsewhere for his or her interest in my client's retirement.
2. Can the judge make me sell the house? Not directly, but yes. The ED statute instructs the judge to make an in-kind division of all the marital property, if possible. In other words, once the judge decides what percentage of the total marital estate each spouse will get, she is supposed to divide the assets to achieve that percentage without forcing either side to cut a check for the difference. In many cases, the math simply won't allow this, so the judge has to make what's called a "distributive award" to one party. If you are separating and the equity in your house is your single biggest asset, then look out. The judge won't say you must sell the house, but he'll order you to pay the other side a cash sum so large your only choice is to sell it.
3. I built my business from scratch while my spouse stayed at home; I can keep it, right? Sure, but go ahead and pull out your checkbook. Business interests, whether held in stock, membership in an LLC, or just assets in the name of an unincorporated "d/b/a" are marital property like anything else. Businesses are amongst the hardest assets to value, especially small businesses or professional practices where the continuing involvement of one spouse is vital to the business's continued survival. I strongly encourage clients to be reasonable when deciding how to value businesses for purposes of settlement in ED cases. It can take tens of thousands of dollars in fees to outside accounting firms to properly value a business. That money is usually tapped from the marital estate itself, so nobody wins! Don't get me wrong, expert valuations are unavoidable in some cases, but make your decision based on dollars and cents, not emotion.
I chose the questions above because they elicit some of the strongest emotional responses from new clients. When a husband or wife looks at me in astonishment and asks, "How the hell can this be the way it is?" sometimes I just smile sympathetically and say, "It's where you've been living this whole time."
The press secretary in this scene feels a lot like many of my clients feel when I explain the principles of Equitable Distribution, or "ED."
ED is the statutory framework that tells courts how to identify and distribute marital property during a divorce case. The central idea is that all property you acquire while married, with a few important exceptions, is considered "marital" and is split 50/50 between the parties, unless good cause exists to make an unequal division.
Here are a few frequently asked questions that I answer in the majority of my consultations about Equitable Distribution:
1. Can my spouse touch my retirement? - Yes, indeed. Retirement benefits accrued during marriage, whether in a 401(k), IRA, or a traditional pension are marital property and are routinely divided in divorce cases. I am surprised by how many clients express shock at this answer. Couples save on the assumption they will be together when they retire, so why shouldn't those benefits be divisible upon divorce? Benefits are usually divided by using a special court order called a Qualified Domestic Relations Order. These orders are very technical and generally cost more to prepare, so I try to avoid using them if the opposing party can be compensated elsewhere for his or her interest in my client's retirement.
2. Can the judge make me sell the house? Not directly, but yes. The ED statute instructs the judge to make an in-kind division of all the marital property, if possible. In other words, once the judge decides what percentage of the total marital estate each spouse will get, she is supposed to divide the assets to achieve that percentage without forcing either side to cut a check for the difference. In many cases, the math simply won't allow this, so the judge has to make what's called a "distributive award" to one party. If you are separating and the equity in your house is your single biggest asset, then look out. The judge won't say you must sell the house, but he'll order you to pay the other side a cash sum so large your only choice is to sell it.
3. I built my business from scratch while my spouse stayed at home; I can keep it, right? Sure, but go ahead and pull out your checkbook. Business interests, whether held in stock, membership in an LLC, or just assets in the name of an unincorporated "d/b/a" are marital property like anything else. Businesses are amongst the hardest assets to value, especially small businesses or professional practices where the continuing involvement of one spouse is vital to the business's continued survival. I strongly encourage clients to be reasonable when deciding how to value businesses for purposes of settlement in ED cases. It can take tens of thousands of dollars in fees to outside accounting firms to properly value a business. That money is usually tapped from the marital estate itself, so nobody wins! Don't get me wrong, expert valuations are unavoidable in some cases, but make your decision based on dollars and cents, not emotion.
I chose the questions above because they elicit some of the strongest emotional responses from new clients. When a husband or wife looks at me in astonishment and asks, "How the hell can this be the way it is?" sometimes I just smile sympathetically and say, "It's where you've been living this whole time."
