New online survey shows significant rise in popularity of Marital Property Agreements (MPAs)

With the Law Commission proposing that marital property agreements (MPAs), covering pre and post-nuptial agreements, should be legally binding only last month, it is a fitting time to publish the results of a survey that has been undertaken (by Alex Porter, who announced the statistics first in full here) which analysed the work of legal professionals involved with MPAs. This project is part of a major study led by Dr Laure Sauvé from the University of Essex, School of Law. Her project will analyse the latest report by the Law Commission using a comparative approach. She is currently exploring the differences between English and French laws.

Increase of 73% in use of Marital Property Agreements UK

The online survey has shown that the popularity of MPAs is on the rise with an increase of 73% in their use over a 20 year period. In the last year 79% of respondents completed between one and five MPAs per month.

Little Application of MPAs in Court

It also revealed that very few MPAs are applied in full once they get to court: just 5% of respondents said courts applied the details of the MPA in full; 76% said courts applied the details of MPAs in part; and 19% said courts had not applied any details of MPAs. In terms of how many cases actually end up in court 40% of participants said they did not represent any MPA cases in court per annum, and 40% said they represent between 1 and 5 per annum. The level of litigation is therefore quite low against how many MPAs are being completed.

Those completing MPAs are mostly very wealthy. Looking at levels of capital and starting with women, the majority, 37% had between £25,001 and £100k, 23% had between £100k and £250k and 10% had over £250k.  Men completing MPAs had a substantially more capital, 30% had between £100k and £250k and the majority, 53%, had over £250k.

This means that 33% of women had over £100k in capital but 83% of men had over £100k. It is no surprise that most cases that go to court are big money cases as the majority of those who want MPAs are very wealthy.

The Law Commission is recommending qualifying MPAs be put into statute and the participants of this survey mostly agreed. 69% thought that MPAs should be binging on the courts so long as there were adequate safeguards. Only 7% thought they should not be binding and 24% were undecided. However an interesting anomaly is that 55% of participants thought there would be more litigation on the basis of misrepresentation or undue influence if MPAs were binding, so for law firms it is a win win situation, especially as the price of a MPA ranges between £350 and £20,000.

Not unsurprisingly 72% said they now advertise MPAs as they have become more popular. The use of MPA will no doubt continue to rise and whether or not there is a rise in litigation will surface in due course. Either way the extra revenue will be a welcome relief for family lawyers with the recent legal aid cuts.

The full results are available at: http://internschooloflaw.wix.com/mpasurvey#

 

Image credit: Richard G via Flickr

Division of Property in a Divorce: Is Equitable Distribution More Equitable?

division property usa divorce(US family law) One of the first things a couple in the process of divorce will need to know is if the state you live in is a community property state or an equitable distribution state. A community property state allows for all of the property acquired during the marriage to be, loosely speaking, divided in half. An equitable distribution state differs in that it aims to provide a fair and balanced approach based on many different facts about the marriage and both parties.

Not mandating equal split of the assets, but rather an informed and possibly unequal distribution can be the best way to decide these issues in some cases, which is why some most states practice equitable distribution instead of community property. Your divorce attorney should help you understand how the law works in your area, whether you live in a community property or equitable distribution state.

Community Property

Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska allows couples to opt in for community property, and Puerto Rico is also considered community property jurisdiction. For couples who get married in a Community Property State, whatever they earn or acquire during the marriage is co-owned equally by both husband and wife, and will therefore be split up equally in the event that the marriage dissolves.

The only exemption to this equal split is property inherited by one party, which would stay with that party completely in the event of a divorce.

The principle behind community property states lies in the collective family unit.

While two people are married, the fruit of their labors should go toward bettering the family unit, a community pool that exists for this very reason. In this sense, the community property states do have a valid argument. Let’s examine the typical scenario that some people might think of in the event of marriage dissolution.

Consider Bob and Sally

Imagine a husband Bob with a high paying job; he is the primary financial provider. Imagine the wife Sally also has a good job, but she only works part time due to the care she provides their one year old son Bobby Jr. Sally not only spends quality time taking care of Jr., she also cooks, cleans and acts as a sort of assistant to the ever forgetful Bob. If, over the course of the marriage, Bob manages to pay off his mortgage and save some money for a total asset value one million dollars. Suppose Sally was only able to contribute 30,000 to savings over the years. What little money she made she spent on clothes and entertainment, but it didn’t matter much to the family at the time because Bob was making more than enough for the both of them. Bob really appreciated the “feminine touch” Sally brought to the house, the home cooked meals and that Bobby Jr. didn’t have to spend most of his time daycare being raised by some stranger.

Many people argue that because Bob and Sally were working as a team for the good of their family, Bob would not have been able to be where he is today without Sally’s many contributions to the family, and there is just no way to put a price tag on that. With that mindset, it should make sense to just split everything in half right? Since Bob’s and Sally’s assets equal one million dollars plus the 30,000, they both should receive $515,000. This is what would most likely occur in a community property state.

This can also be seen as very unreasonable, it really can’t be that hard to figure out that “price tag” to put on Sally’s contributions.

Equitable distribution

Equitable distribution is all about finding a more balanced division of assets based on many factors. Many things enter into the equation such as how long the marriage lasted, what the established standard of living was, and the value of childcare and homemaking that each party contributed. Even whether one party invested in the other’s education or training, and the age, health, income or future earning capacity of both parties should be considered when trying to divide property. The goal here is not to split assets and debts directly down the middle and have Bob and Sally go their separate ways, the goal is to figure out what is most unbiased and fair distribution of property considering the circumstances.

Florida, for example, is an equitable distribution state so the outcome of the divorce might be somewhat different than both receiving $515,000. The court will start at that number (equal halves) and then perfect it based on the many factors stated above. Perhaps Sally would receive a little less, but it will be her equitable share. Sally may get the home to raise Bobby Jr. in until he grows up since she has put so much effort into making the house a home, and being there for Bobby Jr. as he grows.

Florida is also a “no fault” state, meaning that the division of property is not affected by the fact that either party has been unfaithful. It would be a mistake for Sally to assume that Bob’s affair would get her more property than him in the divorce proceedings. A divorce attorney  should be contacted should you have any queries.

There are a lot of factors to consider in the division of property, but ultimately each equitable distribution case will be different.

Family Law Property Issues in Australia

(Victorian & Australian Law)

In recent times, the jurisdiction of property disputes in Family Law has broadened. Traditionally, property was only divisible between married or divorced couples. De-facto and same sex partners are now able to apply for a property settlement, though under different law. In the absence of agreement between the parties, an application for the settlement of a property dispute is made to the court, to be decided on the basis of need.

The settlement reached becomes legally binding and enforceable by the courts. Here’s a rough guide to what usually happens in these situations…

Applications

Parties can make a property settlement by agreement or, if agreement cannot be reached, make an application to the court for a property settlement. Applications for the division of property after divorce can be made to the Family Court or to the Federal Magistrates Court where a property dispute is worth less than $700,000.

Only parties who are or were married can make an application for a property settlement under the Family Law Act 1975 (Cth). In the case of divorce, an application must be made within 12 months of receiving the decree absolute. De-facto and same sex partners can make an application under the Property Law Act 1958 (Vic) in the Supreme Court, County Court or Magistrates’ Court.

Once an application is made, the parties will be asked to attend a case conference, with the aim of settling the property dispute by agreement before it goes to court. Present at this conference will be the parties, any family lawyer involved and a court registrar. If this conference is unsuccessful, the parties will go to court.

Property disputes in de-facto and same sex relationships (domestic relationships) are dealt with under the Property Law Act 1958 (Vic). A domestic relationship is a relationship between two people (regardless of gender) who live together as a couple on a domestic basis but are not married. The domestic relationship must have existed for at least two years for an application for a property dispute to be made under Part 9 of the Property Law Act . If there are exceptional circumstances, for example children being born out of the relationship, this two-year period can be waived. The relationship must have ended after 8 November 2001 for Part 9 to apply.

Property

The type of property divisible in a property settlement includes assets, cash, real estate, investments, insurance policies and superannuation. Debts are also taken into account. In a domestic relationship, as governed by the Property Law Act , superannuation and retirement benefits are not included in a property settlement. In making an order for property settlement, the court calculates the total pool of assets of the parties.

The division of these assets is based on both contributions made by each of the parties to the asset pool and future needs. The contributions of the parties include non-financial contributions, which means a homemaker will not be disadvantaged in this assessment. Future needs takes into account who is responsible for the daily care of the children, earning capacity, age, health and the financial circumstances of any new relationship. The aim is to distribute the property fairly between the two parties.

If you believe your partner is going to dispose of assets before the total pool of assets is calculated you can obtain an injunction to stop the sale taking place. Bank accounts and proceeds from the sale of any assets that has already taken place can also be frozen.

Spousal Maintenance

A party can apply for ongoing spousal maintenance if they can prove they are unable to support themselves. This application must be made within 12 months of divorce. An application for spousal maintenance is often included with an application for property settlement so that all financial issues are dealt with at once.

Spousal maintenance cannot be applied for where a domestic relationship exists.

Enforcement

If an agreement is reached between the parties, they can apply to the court for consent orders. This will make the agreement enforceable by the courts in case of dispute. Consent orders, once made, are final. A party must prove fraud, impracticality or other exceptional circumstances if they wish the consent orders to be set aside or varied.

If a party is not complying with the orders made, an application can be made to the court for enforcement. In this application, the party applying must set out exactly what the problem is. The court will then decide whether an order is needed to enforce the existing order.

A family law property settlement is an important process to go through after the breakdown of a marriage or domestic relationship. A property dispute can be settled by agreement between the parties or resolved by the court. Each case is unique and will be considered by the court according to its own circumstances. The court will not consider who is at fault in the breakdown of a relationship. Rather, it will be resolved on the basis of fairness and need.

Florida Same Sex Separations and Collaborative Family Law

Though the U.S. Supreme Court recently struck down portions of the federal Defense of Marriage Act (“DOMA”), state DOMAs were not affected by the ruling.  This means that same sex couples cannot get legally married in states, such as Florida, that enacted a DOMA.

This also means that gay and lesbian couples cannot get divorced in many DOMA states and oftentimes do not have any legal remedy to separate.  If the domestic partners did not adopt each other’s children, even if both partners had been considered the parents of the children, then child custody, visitation, and child support laws usually will not apply.  Equitable distribution laws (laws related to division of marital assets and debts) do not apply, so separating property and liabilities can get real messy, real quick.  Further, alimony and spousal maintenance laws do not apply, so a partner who spent years homemaking and taking care of children may suddenly become destitute.  So what are separating same sex couples to do?

Domestic partners who are dissolving their relationship should seriously consider entering into a collaborative family law process.

Collaborative family law is a form of private dispute resolution that allows clients to enter into agreements and achieve results that could never be attained through a court process. Each client retains a separate attorney who advises and counsels the client and helps in the negotiating process.  A neutral facilitator, who is a mental health professional or mediator, helps the clients focus on their interests, such as the welfare of clients’ children, continued relationships with each other’s family members, or financial stability.  If there are substantial assets or debts or a business, a neutral accountant or financial planner will be brought in to educate the parties in finances, help fairly and cost-effectively divide property and liabilities, and, if requested, develop a budget for the clients’ future.

As you can see, collaborative family law is a holistic process that takes into account not only the legal, but also the emotional and financial needs of the clients.

The crux of collaborative family law is that the clients agree at the beginning that they will not seek to resolve their dispute through court battles, but rather they will come to a mutually agreeable settlement through this private process.  The clients, and their attorneys, enter into a participation agreement which disqualifies the attorneys from representing the clients in any contested court action.  This provides a safe space in collaborative meetings because each client knows that the other client’s attorney is not conducting opposition research and is committed solely to helping the clients reach a mutually acceptable agreement.  This allows clients to feel more comfortable offering and listening to potential solutions.

In truth, the disqualification clause has much more of an effect on heterosexual couples who are getting divorced, rather than homosexual couples who are separating.  This is because, as stated above, most DOMA state courts just do not have remedies that would properly address the clients’ concerns, and so attempts to fight it out in court will oftentimes be dismissed.

If you are experiencing a same sex separation, make sure to speak with an attorney who offers collaborative family law, and check to see whether the attorney has received collaborative law training that meets at least the minimum Basic Training standards of the International Academy of Collaborative Professionals.

If you have questions regarding a Tampa Bay collaborative family law process, or you want to learn more about your Florida family law rights, schedule a consultation with The Law Firm of Adam B. Cordover, P.A., at (813) 443-0615 or fill out our contact form.

Adam B. Cordover currently serves as Research Chair of the Collaborative Family Law Council of Florida and Vice President of the Collaborative Divorce Institute of Tampa Bay.  Adam successfully spearheaded an effort of the Thirteenth Judicial Circuit of Florida to draft an administrative order safeguarding the principles of collaborative family law (just the fourth such administrative order in Florida) and has completed over 40 hours of basic and advanced collaborative family law continuing legal education credit.

 

Business Owners: Who Will Take the Helm Once You’re Gone?

Succession Planning
Succession Planning

Running a business is a difficult task that often requires hard work and a great deal of planning. Often, it can take years—or even decades—to get a business off and ground and ensure its success. It should come as no surprise, then, that business owners who are successful want to maintain the quality of their organization by identifying a skilled successor. Working with a group of professionals can be crucial when it comes to effective succession planning for an experienced businessman or woman.

What is Succession Planning?

Understanding the basics of succession planning is crucial for those who really want to achieve success with this important task. As one might guess from the name, success planning occurs when a business owner pinpoints one or more individuals who will take control of the company in question, pending the retirement, incapacitation, or death of the owner. Succession planning is not only important for the mentality of employees, but also ensures that the organization will continue to run smoothly as it changes hands. While it can be tempting to wait until the later years of life to consider succession planning, starting early is generally considered to be a better option.

Choosing a Successor

Choosing a successor is often considered to be the first step when it comes to effective succession planning. According to Forbes, a family member is not always the best choice when it comes to handing over the business. Similarly, just because one individual has served as “second in command” for the last few years does not mean that he or she has what it takes to actually run the organization successfully. Instead, business owners should carefully identify their current staff and determine who has what it takes to successfully steer the company in its desired direction in the future.

Serving as a Mentor

While choosing a successor is the first step of succession planning, it is far from the last. In fact, once a successor has been chosen, the hard part has just begun! To ensure optimal results in the success of the business, current owners should serve as a “mentor” to the individual or individuals who have been slated to take over the company down the line. Providing day-to-day tips—as well as long-term recommendations and instructions—can be effective when it comes to ensuring a smooth transition.

Obtaining Assistance in Success Planning

Running a business on one’s own can be difficult, if not all-out impossible. Similarly, business owners often require a great deal of assistance from other professionals when it comes to the challenging task of creating a succession plan for the future. Current business owners should work with a legal team, accountants, and even human resource professionals to maximize their efforts when it comes to this daunting activity. Consultation with other businessmen and women may also prove to be beneficial when it comes to deciding just what route to take with long-term business succession planning.