Charitable contributions in divorce: not just for rich and famous

By Andrew Zashin*

Navigating the divorce process is often both emotionally and financially challenging. As part of the process, couples must divide their assets. While this often involves extensive legal and financial negotiations, and potentially even court involvement, there exists one option in structuring a property division that can yield positive results that benefit both the parties and their communities: charitable contributions.

The media often portrays charitable contributions made in connection with a divorce as an avenue only available to the rich and famous. I previously discussed how, as part of their 2021 divorce settlement, Bill and Melinda Gates pledged to continue working together on their philanthropic foundation, the Bill and Melinda Gates Foundation, which focuses on global health and development. The Gateses, who have donated more than $59.1 billion to their foundation since its creation, stated that they would continue to work together “to shape and approve foundation strategies, advocate for the foundation’s issues, and set the organization’s overall direction.”

Similarly, following her divorce from Amazon founder Jeff Bezos in 2019, MacKenzie Scott has made headlines for her philanthropic giving, donating more than $14 billion to over 1,600 charities and organizations. She works with a team of advisers to identify and vet community-focused organizations that work to reduce disparities in health, education, economic outcomes, and other critical issues.

But incorporating charitable contributions into a divorce settlement is not just for the rich and famous. In fact, charitable giving serves as a viable option for divorcing couples of all income levels. As charitable giving can take many forms, including donations of money or assets, one or both parties may choose to donate a portion of their property division to a charitable organization as part of their divorce settlement. This provides the parties with a way to support causes that are important to them, while potentially receiving tax benefits that can help offset some of the financial costs of the divorce.

There exist several types of vehicles that can help facilitate these charitable contributions. I have previously discussed the tax “win-win” associated with donor advised funds – accounts that parties can use to deposit assets for charitable donations over time. Divorcing couples who cannot agree on how to divide an asset may consider donating that asset directly or putting that asset into a donor advised funds.

Parties may further agree that one or both parties will contribute a certain number of dollars to a donor advised fund annually. Similarly, charitable remainder trusts are another vehicle available to divorcing couples. If a party plans to donate assets to charity, he or she could establish an irrevocable charitable remainder trusts that provides the income generated from the trust’s assets to their former spouse for a set period of time, after which the trust assets transfer to the designated charity. The spouse who donates the assets to the CRT may also enjoy the tax benefits associated with the charitable donation.

Overall, divorcing couples should consider incorporating charitable contributions into their final agreement. By working with qualified financial advisors and family law attorneys, divorcing couples can explore the best ways to incorporate charitable giving into their property division and create a positive legacy that will endure beyond their marriage.

This article originally appeared as a column for the Cleveland Jewish News.

22-year high mortgage rates another hurdle for divorcing couples

By Andrew Zashin*

As mortgage interest rates soar to a 22-year high, divorcing couples face yet another hurdle as they work to disentangle themselves from one another. With the average 30-year fixed mortgage rate exceeding 7%, divorcing couples must make increasingly complicated decisions regarding property division, housing arrangements and the overall financial stability for both parties involved.

Divorcing couples often have an emotionally charged time determining what to do with the family home (also called the “marital residence”). Traditionally, there are two primary ways of addressing a family home encumbered by a mortgage during a divorce. In the first option, one party keeps the home and refinances the mortgage to remove the other party’s name from the debt and to buy that spouse out of any equity that they have in the home. In the second option, the parties sell the home, pay off the mortgage and divide the proceeds.

With interest rates at a 22-year high, however, the first option is becoming increasingly less desirable as the party looking to refinance can end up with significantly higher monthly payments under the current rates. While one may think that has caused parties to default to the second option and sell the home, falling housing prices and the anticipated downturn in the housing market have deterred some parties from selling their homes at this time, particularly if the sale may lead to a loss.

This has led couples to embrace creative solutions regarding jointly-owned property. Some couples opt to continue owning the property together, and in some cases even continue to live together, until refinancing becomes more appealing. Some eligible parties have explored mortgage assumption, the process of transferring an existing mortgage to another party. Other parties are deciding not to refinance and are electing to remain on the mortgage while the spouse remaining in the residence repays the other spouse’s portion of the equity over time.

The decision to “wait out” the market or extend the time frame for refinancing post-divorce, how-ever, does not come without risks and difficulties. A party that agrees to remain on the mortgage risks credit score implications and may face difficulty immediately qualifying for another mortgage. This may prevent that spouse from securing a new residence until their name is removed from the underlying mortgage on the marital residence.

High mortgage interest rates do not just impact property division in divorce. A higher interest rate environment might lead to tighter budgets and financial strain, affecting each spouse’s financial stability post-divorce. This can influence negotiations over spousal and child support payments.

Ultimately, mortgage interest rates can significantly impact divorce proceedings, shaping decisions about property division, housing arrangements and support. As couples and their legal and financial representatives navigate the complexities of the divorce process, they must consider the potential effects of these mortgage interest rates on short-term and long-term financial outcomes. By weighing these economic realities, individuals can make informed decisions that set the stage for their post-divorce financial well-being.

This article originally appeared as a column for the Cleveland Jewish News.

5 questions to ponder when contemplating divorce

By Andrew Zashin*

Getting divorced is hard enough and the division of real property can make it even more contentious. Often, real property is one of the largest assets to be divided and considerable money could be at stake. Add in a dash of emotion (memories were made there, and children raised), not to mention the headaches of moving and the prospect of uprooting children, and it is really no wonder that real property division can be such a major source of fighting. Inevitably, the same questions come up at the beginning of case after case. Family law practitioners are often asked these questions:

• The house is in my name only/my spouse’s name only/both names. Does that matter?

With limited exception, no. If the property is an asset of the marriage, it is irrelevant whose name is on the deed. Just because only one person is in title does not keep it from being a marital – and, thus, divisible – asset.

• My spouse is threatening that the house will have to be sold. Is that true?

Not necessarily. Generally speaking, the property will either be kept by a party or it will be sold. Which option is appropriate in any given case will depend on who wants the property, and that person’s ability to financially support it and to buy out the other’s interest. If the parties cannot reach an agreement as to who is keeping the property, then the court is probably going to force a sale.

• How do we divide the house?

While it’s true that there are documented cases of parties dividing homes with chainsaws and walls, as a practical matter the property is going to be divided by dividing its equity. If it is sold, the equity is easy to figure out. It’s on the check that you get from the title agency, and the question is simply how the net proceeds of the sale should be allocated. But if one party is going to keep the real property, then the question is at what price does the retaining party buy out the other?

The buyout price would be one-half of the marital value. The marital value would be the fair market value (as determined by agreement or an appraisal), less any outstanding debt owed on the property and accounting for any separate property interests on either side. In a buyout situation, the retaining party may be expected to come up with some cash for the buyout, or else the buyout price may be offset against some other asset. Outstanding liens may have to be refinanced into the sole name of the retaining party.

• I put money into the house/owned the property before the marriage/inherited the property. Can I get it back?

As long as it’s traceable, separate property can usually be recouped. However, traceability can be challenging when it comes to real property because of several competing factors. Often, marital funds are being used to build equity, via things like mortgage paydown and renovations, and it can be difficult to determine which part of the equity is marital and which is non-marital, especially in volatile markets. And, often, needed records were lost to time or never kept at all.

• What about real property that we don’t live in?

The same analysis applies whether the property is your primary home, an investment property, a vacation property, or even a home that you maintain for an adult child. Rental income does not typically factor into the property division – except if its income earning potential makes it more valuable – but rental income would be considered in other financial aspects of the divorce, such as for support purposes.

Each situation is unique and there are numerous caveats to each answer. It is always best to consult with a domestic relations attorney for a more thorough analysis of your specific situation.

This article originally appeared as a column for the Cleveland Jewish News.

2023-11-10T13:38:10-05:00July 17th, 2019|Divorce, Property Division|

A helpful blueprint to your last will and testament

By Andrew Zashin*

Less than half of the population has a last will and testament. Ohio law provides a way to divide the property, or “estate,” left behind when a person dies without a will.

Generally speaking, your estate will go to your spouse. Or, if you have no spouse, your estate will go to your children. If you have no children and no spouse, your estate will go to your parents, or your siblings, or their descendants, in that order.

In many cases, the intestacy laws may provide what you would like to see happen anyway. But so you may want to select the person who will be responsible for administering your estate. You may want to provide that the administrator be paid (or not paid) for his or her services.

And, if you are divorced and remarried, if you have children from different relationships, if you want certain people to receive specific heirlooms, accounts, or assets, or, really, if your situation is anything other than wanting to simply leave your estate to your spouse or children, it is so important to put your wishes formally in writing.

Here are some questions you will want to consider:

What assets are in your estate?

Many assets, such as accounts that are “payable on death” or jointly held, retirement accounts on which a beneficiary is named, life insurance policies, real property that is jointly held or else subject to a “transfer on death” designation, or assets held in a trust, will not be divided by the probate court (or by will.) Instead, those things will transfer to the joint account holder, beneficiary, or other payee. Anything otherwise in your name or owned by you is probably an estate asset.

What debts are in your estate?

You may have heard your debts do not survive you, and they usually go away upon death. It is true that loved ones will not generally be responsible for the debts of a deceased relative. However, it is important to note that the debtors – a mortgage holder, a credit card company, etc. – will have a claim against the estate and that debt will likely need to be repaid from the estate before your heirs will receive any inheritance.

Who do you want to inherit from your estate, and how?

An heir could be a person or an organization, and of course provisions are occasionally made for beloved pets. Keep in mind it is not really possible to completely write a spouse out of a will in the state of Ohio. A surviving spouse, by law, has the right to certain assets, despite what a will provides. You should clearly articulate all individuals you are intending to include, and any you may be intending to exclude, otherwise the probate court may incorrectly presume what you intended. In addition, you should think about what you want to see happen if one of your heirs predeceases you. Do their descendants inherit their share or something different?

Who do you trust to appropriately administer your estate, ethically and accurately handle funds, and enact your wishes?

Keep in mind that individual would have to ultimately accept the appointment. Typically, that individual would be paid for their services, usually proportionate to the size of the estate, but you may make some alternate request known if you feel it is appropriate.

If you have minor children you may specify your intention as to responsibility for their care. A court could ultimately decide that a different arrangement is more appropriate, but your wishes would doubtless be considered.

You are not required to hire an attorney to draft your will. But it is important to understand that certain formalities must be observed. For example, it must be signed by you and witnessed by at least two individuals who do not stand to benefit from the estate. And, more complex situations can get tricky, and you may find it useful to at least consult a will drafting software package, book, the Ohio Revised Code, or other how-to resources to be certain you are saying what you think you are.

This article originally appeared as a column for the Cleveland Jewish News.

In divorce, separation of business not easy

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

When divorcing clients first enter my office they often already know, even if they don’t like it, that their assets will be divided in an equitable typically, equal manner. But, as King Solomon understood, some things just can’t be cut down the middle without utterly destroying them.

In the context of a divorce proceeding, aside from the kids, the most obvious examples of this are the business and the house. That doesn’t mean a fair division is impossible. It just means we do it in a different way.

But, in cases in which the children can go back and forth between households and a house can be put up for sale, a business is “split” differently. Not only is a business an income source, it is also an asset. It might even be a family legacy. Often it represents hopes, dreams and sweat equity, and has enormous emotional value. And, in nearly all cases, it is preposterous to presume it would be simply sold, it would be split, or that the former spouses would simply continue as joint shareholders and be able to successfully manage it together after a divorce.

According to statistics from the U.S. Small Business Administration, far more than 20 million small businesses exist in the United States. Small business owners engage in all sorts of activities, from multilevel marketing sales (such as Mary Kay and The Pampered Chef), to retail sales (at brick-and-mortar stores or via websites like Etsy or Ebay), to franchise ownership, to service firms (doing things like consulting, construction, or design), to manufacturers. Consequently, these issues come up quite frequently.

So what happens to a business in a divorce? In the broadest of terms, one party will usually keep the business. The other will relinquish all claims to future growth and will have no responsibility for future liabilities. The spouse giving up the business will then get half of the marital value of it. Most often, the identity of the retaining party is pretty clear.

Perhaps only one spouse has been actively involved in the startup and management of the business, or maybe it is a family business that has been operating for a few generations. It is only logical that someone who can’t take a decent snapshot or repair a car isn’t going to take on a business focused on providing those services. And it could get really uncomfortable or even downright nasty to remain jointly involved in a business, especially if your ex-spouse’s family is involved too.

The more challenging part is figuring out what amount of money the relinquishing party is entitled to. Sometimes the value of the business – as an asset – is next to nothing, as can be the case in service businesses. In those cases it may be just an income stream that factors into support calculations. Sometimes the value is based largely upon inventory, as in direct sales. Sometimes the value is more difficult to quantify. Very often, an expert will be hired to look at the books, the tax returns, and so on, in order to determine the fair market value; essentially, this expert determines the worth of the marital share of the business on the open market.

Once a fair market value is determined, the next task is resolving how the out spouse is going to get paid. Sometimes the payout is a lump sum, sometimes it is paid out over time with interest. Sometimes it is an offset from other asset, such as equity in the house or a brokerage account, and sometimes it is set off by the taking of more debt.

Of course, in an ideal world – if you are the one retaining the business, that is – there would be planning, thorough bookkeeping and a good prenuptial agreement to help your business weather a stormy divorce. But, barring those, know that businesses can, and most often do, continue even after the marriage ends.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

2023-11-10T13:38:15-05:00December 20th, 2013|Divorce, Family Business, Property Division|

Property Division – Who Gets to Keep Rover?

In the good old days, when a married couple decided to
split, mom kept the house, the kids, and the family dog. These days, the
division of property and parenting time is no longer black and white. Today,
when there is a dispute as to who gets the house or the furnishings, the court
considers many factors such as, who purchased the item, was the item a gift,
was it inherited, which party is in a better position to maintain or afford it,
etc. The value of the property is generally offset by cash or the division of
other property to make the split equitable (legalese for “fair”). To
illustrate, a court might order that the husband gets the TV and the wife gets
the couch. With regard to dividing the time with the children, if there is a
dispute the courts generally follow guidelines which attempt to assess the
“best interest” (again legalese, but self-explanatory) of the child.
But what happens to Rover?

Courts consider a dog, although a beloved family member,
property. From a legal point of view a dog is no different from the living room
couch. Of course, some families feel that their pet is another child, and in
some cases the only child, which makes the concept of a dog as mere
“property” hard to accept. Yet, the courts usually look at the family
pet as property that needs to be allocated to one party or the other. Only in
extremely unusual cases will a court order a visitation schedule for an animal.
This is because the animal is not a child and state statutes consider a dog to
be property. To determine who should get the dog post-divorce courts look to
see who the dog is registered to, who purchased the dog, to whom the dog was
gifted or to anything else that makes sense under the facts and circumstances
of a particular case. This is the same process the Court uses to divide
furnishings, bank accounts, and the wedding china.

If the parties can agree on a certain visitation schedule it
is likely that a court will enforce that agreement. While a visitation schedule
will allow for both parties to continue spending time with the pet, is such an
arrangement really in everyone’s (including the pet’s) best interest? Are the
strings that come with sharing a pet worth it for anyone involved? Although
Rover is like the child you never had (or more loveable than the one(s) you do
have), he is an animal. Bouncing back and forth between two households does not
provide him with the stability that a domesticated animal needs. Also, a
visitation schedule for a pet is for a very, very long time. There is no age of
majority for a dog. Most people who have decided to live separate lives will
not be able to sustain that sort of relationship with their ex for up to 20
years.

At Zashin & Rich, we have represented many clients who
sought “custody” of the family pet. Determining who the rightful
owner is can be an expensive process. In fact, we have had a committed pet
owner who bought a new vehicle just to transport their dog back and forth.
“Pet custody” cases are different from deciding who gets to keep a
certain piece of property because many emotions come into play; somewhat like
deciding who gets to keep a family heirloom. Parties must look at the cost of
fighting to keep the pet compared to the value of the relationship with that
pet. If a party decides that Rover is priceless, and he/she will pay whatever it
takes to keep him, in legal fees alone Rover may end up being a very expensive
pet indeed.

2023-11-10T13:38:16-05:00August 28th, 2013|Property Division|

Property Division in Divorce – Trying to Reopen a Case to Renegotiate a Bad Deal

In our previous blog, Property Division in Divorce – Jamie McCourt isLooking for the Payoff Pitch, we discussed the divorce of former Los Angeles
Dodgers owner Frank McCourt and how Ms. McCourt asked the court to set aside
her divorce settlement. Specifically, she wanted to nix the previous agreement
because Mr. McCourt sold the Dodgers – an asset he kept in the settlement – for
more than two billion dollars before the ink had even dried on the settlement
documents. The actual sale price for the team was far higher than anyone
thought was possible. While the degree of difference between the anticipated
value and the actual apparent value of this asset is certainly unusual, the
situation is certainly not. People often come to our office wanting to reopen
their divorce case or revise their settlement because something was unfair
about the result. There are occasions where we have prevailed in these
situations. But that being said the person trying to reopen the case is more
frequently on the losing side in court. Here’s why:

The public policy that guides our courts in all legal decisions, including
divorce cases, is the need to create “finality” as to a dispute. When
a case is closed, public policy dictates that it should be over for good.
Period. Thus, only in rare circumstances can a court order, or a settlement
agreement, be set aside. In Ohio, for instance, there is a considerable body of
law which contemplates under what circumstances a case can be reopened. The
allowable circumstances are actually quite rare. Typically the person seeking
to reopen the case must show there was some fraud, mistake, or duress. Thus, one
side must have unfairly taken advantage of the other side. And, the request
must come relatively quickly, no more than a year from the time the court
issued its order or adopted the parties’ agreement. Beyond a year the ability
and reasons why a court would reopen a case become even narrower (typically
that “prospective enforcement” of the terms would be unfair or there
was a fraud upon the court.) Aside from these examples, when the case is over
it is really over.

After knowing what is now known about the value of the baseball team, Ms.
McCourt feels like she got a raw deal in accepting a lump sum settlement of
$131,000,000. (Note that her settlement also included several parcels of real
estate, multiple vehicles, all financial accounts in her own name, and
indemnity against significant back due taxes and other debt.) She argues that
she also should have received her fair share of the more than two billion
dollars received from the team’s sale.

What your divorce lawyer will tell you is that when people divorce usually
one spouse takes the family business and the other spouse is bought out for an
agreed upon or court ordered number. In this way the parties are separated as
much as possible, not only legally and physically, but also financially.
Unfortunately, it is often true that during the process of this separation one
side (the “in spouse”) might have more information than the other
(the “out spouse.”) And, because the out spouse is usually bought out
of the business completely, the determined value of the business is quite
significant. With the benefit of hindsight it is obvious that Ms. McCourt, the
out spouse, made a bad deal. Or, at least, she made a deal that could have been
better. If Mr. McCourt and his attorneys are to be believed, no one could have
known the team would sell for so much at the time the divorce settlement was
made. However, if Ms. McCourt and her attorneys are to be believed, the value
of the team was purposely misstated.

At Zashin & Rich we have had clients who have received a business in
settlement and have subsequently sold it for a windfall as Mr. McCourt claims
to have done. But many others have not been so successful and sometimes the
business significantly drops in value for whatever reason. Certainly, there are
instances of one party being ripped off by the other. But a situation in which
the out party was actively mislead or flat out lied to by the in party, is very
different than an out party’s failure to complete appropriate due diligence or
to hedge bets on what will happen to an asset in the future. That is, whether
or not Mr. McCourt actively hid information about the Dodgers’ value matters.
But whether or not Ms. McCourt did all appropriate due diligence and used that
information to make a settlement decision she believed at the time to be sound
also matters. The mere fact that the decision turned out to be a poor one in
retrospect is largely irrelevant. If every case was subject to being reopened
each time someone sold a business for an amount much greater than or less than
the amount considered at the time of the agreement or court decision was
struck, our courts would work even more slowly than they already do. Things
would grind to a virtual halt. In this case, especially given the stakes, it
seems unlikely that due diligence was missed. And while the court in California
has ruled that financial details of the sale must be turned over to Ms.
McCourt, based on the facts reported so far, our prediction is that Ms. McCourt
will probably not prevail. However, as the facts come out, the final decision
will doubtlessly depend on what each party did and when. Stay tuned….

2023-11-10T13:38:16-05:00June 25th, 2013|Property Division|

Property Division in Divorce – Jamie McCourt is Looking for the Payoff Pitch

March 28, 2012… the Los Angeles Dodgers announced that the team sold for a
record-breaking $2 billion dollars. And Jamie McCourt cries FOUL! Jamie claims
that her ex-husband Frank McCourt, former owner of the team, intentionally
underestimated the value of the team and cheated her out of a serious chunk of
change. About $770 million worth of pocket change. That’s a whole lot of
Cracker Jack!

What led to the dispute was that on October 11, 2011, Jamie and Frank
executed a Binding Term Sheet agreeing to a distribution of assets from the
marriage. Subsequently, in January 2012, Jamie executed a Stipulated Judgment
asking the court to enter the terms of the Binding Term Sheet and acknowledged
that she was waiving her right to a full hearing. Jamie even agreed that
although the value of the LA Dodgers had been a contentious issue during
negotiations, she was willingly entering into the agreement “regardless of
the value that [the team] may ultimately have.” Now Jamie is asking the
court to set aside that agreement and award her a distribution based upon what
the team actually sold for.

So why didn’t Jamie realize the team was worth so much money? Well, first
you have to look back at the recent history of the Dodgers. In July 2011, the
team filed for bankruptcy. In fact, according to court records, the Dodgers did
not even have enough money to make payroll that week. Not only that, months
before the bankruptcy filing, an altercation outside of Dodgers stadium left a
man in a coma. The family of this man and the hospital that treated him alleged
that Frank and the Dodgers were responsible for his injuries and subsequent
treatment because security was lacking at the ballpark. The team was over a
half a billion dollars in debt and counting. So what was it worth? You could
argue that on its face the team was virtually worthless.

Frank’s lawyer claimed that during negotiations Jamie was provided research
that indicated the team could potentially sell for $1.5 billion. Jamie’s lawyer
contends that Jamie never received this information “and might not have
understood it if she had.” Wait a minute! She potentially received
information about the value of the team that she may or may not have
understood, yet accuses Frank of knowingly defrauding her? The fact of the
matter is that Jamie received a very good settlement considering the state that
the team was in when she agreed to settle, and it was up to Jamie to perform
the necessary due diligence.

Jamie alleges that she believed that the divorce agreement was to be a 50/50
split. It has also been reported that in August 2011, Frank entered a document
with the court stating that the couple’s joint assets were worth $294 million –
not the team, but the total joint assets.

So let’s take a look at what Jamie actually received:

  • 1 house in
    Los Angeles
  • 2 Houses in
    Malibu
  • 1 Condo in
    Vail
  • All of the
    contents of the above mentioned homes
  • All of the
    vehicles and boats that were titled in her name
  • All accounts,
    funds, and assets held jointly by the parties
  • $131 million
    lump sum settlement
  • $225,000 per
    month until the lump sum settlement was paid
  • Up to
    $593,675 reimbursement for taxes, interests, and penalties for her
    2008/2009 individual tax returns
  • No tax
    liability – and treated as 100% owner of business interests and properties
    to entitle her to 100% of the tax deductions associated with those assets
  • Indemnity
    from the $18 million line of credit partially secured by the Vail condo

Frank received two houses with their contents, his vehicles and boats, his
individual accounts, and his companies.

Without even knowing what any of these assets are worth, it is clear that
this was not meant to be a 50/50 split. The fact that Jamie walked away with no
tax liability whatsoever points to the division not being 50/50. Yet even if a
50/50 split was the intent, in October 2011 this team was for all intents and
purposes worth significantly less than what someone was ultimately willing to
pay. Furthermore, did Jamie request a valuation on the team or any of the
assets? No. She took what she thought was a great deal and ran with it.

At the end of the day, Jamie McCourt did not walk away a pauper. Could she
have held out and made more money? Sure. But she could instead have received
less. The bottom line is that Jamie took a chance on settling her divorce. She
agreed to a sum certain and even agreed to that amount regardless of the value
of the assets, and specifically the team, may ultimately have been worth.
Should the court now set that agreement aside? When she signed the agreement
Jamie probably thought that the team would sell for less due to its debt and
legal drama. She may have also believed that the clause enforcing the agreement
terms in spite of the team’s ultimate value would serve to guarantee her $131
million lump sum payment if the team were worth even less. Unfortunately for
Jamie, the situation was reversed and the clause was now acted to keep her from
getting more money.

Ohio Revised Code § 3105 generally contends that the division of marital
property should be equal. However, Ohio courts have found that this statute
applies to contested divorces and not settlement agreements. Davis v. Davis,
1996 Ohio App. LEXIS 1612 (Ohio Ct. App., Cuyahoga County Apr. 18, 1996).
Further, the courts have determined that “[w]hen the parties have agreed,
without objection and with the judge’s approval, to enter into stipulations for
the record, the court will not consider objections to such stipulations on
appeal.” Presjak v. Presjak, 2010 Ohio 1455, P40 (Ohio Ct. App.,
Trumbull County Mar. 31, 2010).

If Jamie found herself before an Ohio judge, the decision would likely be in
favor of her ex. Since the McCourts’ divorce is under California jurisdiction and
California is a community property state, the court may find otherwise. Stay
tuned for the Judge’s decision in June. It’s sure to be a bench clearer.

2023-11-10T13:38:16-05:00May 13th, 2013|Property Division|

Retirement plans have access issues – and advantages

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

Clients who come through my door are often quite protective of their retirement funds – understandably so. After all, an individual typically spends his or her entire working life saving for retirement. A retired worker will probably be entitled to some Social Security benefits.

A lucky minority will have pension plans to count on. No matter the case, most workers will be looking to supplement their retirement incomes with payouts from an Individual Retirement Account, 401(k), 403(b) which is a tax-deferred type of account similar to a 401(k) but generally offered in the public and nonprofit sectors, or something similar.

Perhaps it is not surprising, then, that I am frequently asked about when such retirement plans can be touched, and by whom.

You probably are somewhat familiar with your plan’s rules and the associated tax laws governing your retirement age. No doubt you have named one or more beneficiaries who will receive the balance of your account should you pass away before being paid out all your saved monies. You probably already know you can “cash out” your retirement account – though, of course, you likely know you will pay a large penalty for doing so. You may know whether or not your plan permits you to borrow against your saved amount.

What you may not know is that funds in 401(k), 403(b) and some other accounts can often be taken out prior to retirement in event of a “hardship.” A hardship distribution is generally available in more extreme circumstances when funds are not available elsewhere. Qualifying hardships may include certain medical expenses, costs relating to purchase of a principal residence, certain expenses for repair of such a residence, payments necessary to prevent eviction from or foreclosure on one, tuition and related educational fees and expenses, or burial/funeral expenses.

You also may not know that retirement savings are generally safe from creditors – at least while they still sit in the account. This means that if money is due you, or if you owe money from a judgment, back due rent or funds owed from a lawsuit, for example, it is probably not going to be able to be collected from a retirement account. Similarly, retirement accounts generally will remain intact in spite of a bankruptcy. Note that back due child and spousal support is handled differently than other types of debt.

A further, but important point, which many find surprising, is that retirement plans are divisible upon a divorce. It is tempting and quite common to take the attitude that “I worked hard to earn that money, not my spouse. It’s mine and I shouldn’t have to share it!” However, according to the law, this simply is not true. Just as the house, the business, the bank accounts, and the debts get split upon a divorce, so, too, do the retirement accounts. As a general rule, anything that accrued during the marriage will be split, very likely equally. Yes, even pension plans. A specific type of order is issued to split up retirement plans so that tax-deferred accounts can be transferred to the ex-spouse with no penalties, and pension benefits can be paid out to the ex-spouse according to the plan’s standard retirement calendar.

As life expectancy increases and confidence in Social Security decreases, retirement savings plans will doubtless become more popular. If you are reading this, you likely have at least one such plan. Just as it pays you to take time to consider what investments you want to make, it makes sense to understand the rules and laws that affect how and by whom your money can be accessed. You can start by talking to your plan administrator.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

2023-11-10T13:38:16-05:00January 16th, 2013|Divorce, Property Division, Retirement Planning|

‘Til death do us part’ not as long as you think

By Andrew Zashin*

This article originally appeared as a column for the Cleveland Jewish News.

When a couple gets married, it is common to do a bit of estate planning. A person, for example, might make his or her spouse the beneficiary on any life insurance policies and retirement plans. A joint and survivorship deed on any real property might be executed. The couple might also execute reciprocal healthcare powers of attorney, naming the other as the person who can make medical decisions should he or she become incapacitated.

When that couple has children, they might do some more estate planning. They might take out new life insurance policies to ensure their children will be provided for. They might decide it is time to write wills. And they might select a person or people to be named guardian of their children should the unthinkable happen and they die prematurely.

Estate planning is, generally speaking, planning for what happens to your worldly possessions upon your death. Death, particularly one’s own, is something that no one likes to think about. But barring some scientific breakthrough, it is unfortunately inevitable. What happens next, though, need not be. Most people consider their estate planning when major life events happen – marriage, births and deaths. Should you find that divorce is also going to become part of the time line of your life, don’t forget to revisit your estate plan and revise it appropriately.

After a divorce, wills may need to be changed. Generally an ex-spouse is automatically written out of a will by operation of law, but other items may need to be addressed, such as who will become the guardian of your children if they are minors at the time of your death. And, depending on how contentious the divorce was, there is a reasonably good chance that you no longer want your former spouse to be named as the person authorized to make important medical or financial decisions on your behalf. So, you may need to execute new healthcare and financial power of attorney forms. Real property should have been distributed as part of your final divorce award or settlement, but you should make sure any necessary deeds get properly prepared and filed so that the property is titled the way you intended it to be. Any trusts established by you or on your behalf should similarly be reviewed and revised as necessary, as should custodial accounts. And beneficiaries of life insurance policies and retirement plans may need to be updated.

Potentially more problematic is what happens in the rare event that an individual dies during the pendency of a divorce. For purposes of the probate laws, you are still married until the day you aren’t – that is, you are still married until the day your divorce decree is signed. And, as much as the divorcing parties wish differently, divorces do not happen overnight. In Ohio, a marriage simply cannot be terminated in less than 30 days, and as a practical matter, it is more likely to take several months to a year or more.

If you are considering filing for a divorce, you may find it beneficial to ask your domestic relations attorney about steps you can take to manage your estate plan before you file, as once the divorce proceedings have begun, you will be limited by both court order and law as to what you can change.

You should not – and the courts will not allow you to – use this as a tool to hide marital property from your spouse. But if you, for example, have children who were not born of the marriage, have a terminal illness, or are about to undertake an especially dangerous action such as contracting to work in an active war zone, it may be particularly important for you to consider these issues.

No matter your situation, a conversation with your attorney and a little planning can ensure that your loved ones will be taken care of, while those you no longer love will not unintentionally benefit.

*Andrew Zashin writes about law for the Cleveland Jewish News. He is a co-managing partner with Zashin & Rich, with offices in Cleveland and Columbus.

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