Visualizing Your Life: Achieving Your Post-Divorce Goals

Chris RobertsChris Roberts, Principal

I have found that an effective way to face divorce is to visualize your future post-divorce life, then work backwards (so to speak) from that end goal to take the steps necessary to achieve it. This strategy can help you shape the positions you take during the divorce and create a light at the end of the tunnel.

I discuss this concept in detail above. Please don’t hesitate to follow up with me at cwroberts@lerchearly.com and check out my bio for more on my practice and background: https://www.lerchearly.com/people/christopher-w-roberts.

Just When You Thought It Was Over…

Some Outcomes in a Divorce Are Permanent, While Others Are Designed to Change

Chris RobertsChris Roberts, Principal

Everyone has something to protect in a divorce, and I have yet to meet a client who doesn’t feel relief when the process is over. Many of those clients, however, are surprised when an issue they thought they resolved for good resurfaces later.

In Maryland, the reality is that some issues can never be permanently resolved in an initial divorce proceeding, while others are always resolved in the first case. Stilll others are capable of being resolved in the first go-around by agreement, depending on the terms of the deal.

Property Issues are Resolved, Once and for all, at the Time of Divorce

The Court is expressly authorized to resolve disputes regarding marital property at the time of divorce, but has no authority to do so once the divorce case has concluded and the time for appeals has passed. That means that, if marital property issues are not resolved at the time of divorce, they cannot be resolved later.

It bears noting that there is a distinction between the general notion of property and the term “marital property” which is specifically defined by statute.

Orders Related to Children Are Never Permanent

Child custody and/or visitation issues are never permanently resolved.

In Maryland, the Court is guided by one overarching standard related to children, to which all other legal standards speak – the best interest of the child. At the end of the day, judges are tasked with making decisions that serve children’s best interests. That is not only true when a judge signs an order following a contested custody proceeding, but also when a judge memorializes a private agreement between the parties related to children, which is also generally incorporated into a consent order.

Though a child custody order will conclude the current dispute, the Court retains authority to modify such orders should circumstances require it to serve a child’s best interest. Things change in life, and if those changes impact a child negatively, public policy demands that courts be able to intervene for the sake of the child. The same is true for child support. If there is a material change in a parent’s income, or expenses for a child change significantly, the Court always has jurisdiction to modify an existing child support order.

For Alimony, it Depends

Alimony is typically modifiable, both in amount and duration, if circumstances and justice require a change.

If the Court determines alimony initially, the alimony will always be modifiable, as the law does not authorize the Court to make its alimony determination non-modifiable. In a private agreement, however, parties can agree that alimony be non-modifiable, both as to amount and duration. Parties can also be more creative than the Court in negotiating the terms alimony.

As examples, in a private agreement, alimony can be based on a formula that automatically accounts for a fluctuation in income, and can terminate when an alimony recipient cohabitates with another person and/or upon the arrival of a certain date. A Court is not able to craft such solutions. The language of a private agreement is important in securing the non-modifiability of alimony.

Indefinite Alimony Does NOT Mean Permanent Alimony

Case law tells us that alimony is not intended to be a lifetime pension, so there is no such thing as “permanent” alimony.

The statute provide for “indefinite” alimony, which essentially is an open-ended period of alimony. As mentioned previously, court-ordered alimony is modifiable; however, it may also be terminated if either party dies or marries, or “if the court finds that termination is necessary to avoid a harsh and inequitable result.”

What constitutes harsh and inequitable result? That is the proverbial (and in some cases literal) million dollar question, and it is a judge’s job to determine based on the facts of the case. If you are the would-be payor of alimony, this uncertainty places a premium on having an exit strategy for your alimony obligation. This can be achieved via a negotiated resolution and careful language detailing the specific circumstances when alimony will terminate.

My Spouse and I Have a Verbal Agreement. What is the Quickest Way to Obtain a Divorce in Maryland?

AvatarDonna E. Van Scoy, Principal

The short answer is: it depends.

Obtaining a divorce in a short marriage with no children and few, if any, assets is very different than a long marriage with children and assets. Then there are marriages in between the short marriage and the long marriage with combinations of no children or children and a variety of assets.

A logical first step is to contact a lawyer. While you and your spouse have reached a verbal agreement and are working together, a lawyer cannot represent both parties in Maryland. No matter your level of cooperation and intentions, you and your spouse can easily have conflicts of interests in a divorce. So one or both of you should to consult with a lawyer.

Moving the Process Forward

  1. Be open to the fact that you and your spouse may not have considered every issue that needs to be addressed in your divorce. It is possible that what you agreed to with your spouse will negatively affect your rights. A lawyer will explain the law, review your agreement, and identify any issues. TIP: Do not sign any agreement with your spouse before reviewing with a lawyer.
  2. Both you and your spouse should each meet with a lawyer. While you have the right to obtain your divorce without the assistance of counsel, in my experience that can result in delay and greater expenses than securing legal advice at the beginning of the process. If your spouse does not want a lawyer, you can be the party that moves the divorce along. However, your lawyer will need to recommend to your spouse (in writing) that they obtain counsel. Your lawyer could provide two or three names of other counsel for you to share with your spouse. Then hopefully your spouse will also seek counsel, or at the very least your spouse could review the final agreement with an attorney.
  3. To assist in the evaluation of your case, come prepared to your initial consult. Write down what you believe is your agreement with your spouse. Bring a list of all your assets including current values and any debt associated with the assets. Bring a copy of your current mortgage statement, your last three years of tax returns, your last three paystubs and, if possible, your spouse’s last three paystubs. If there are children consider how you and your spouse will parent your children and what the children’s schedule will be with each parent.
  4. Once you have all the information necessary to propose a settlement to your spouse, a Separation Agreement will need to be drafted. Your spouse (and counsel) will need to review and approve the agreement. If both of you continue to cooperate with each other in the spirit of divorcing as quickly as possible, the Separation Agreement could be completed and executed as soon as your lawyer can draft the agreement and your spouse can review and approve. While it can be longer or shorter, the average completion of an agreement is 30 to 60 days.
  5. The next step is to file a complaint for an uncontested divorce. Your spouse has to be served and has up to 30 days to file an answer. The fastest ground for the divorce is a Mutual Consent. You and your spouse can speed up the answer time up by working to file the complaint and answer at the same time or together.
  6. The court will then schedule an uncontested hearing. The moving party (the one who files) and their lawyer need to be present. The other party (and their lawyer) can also be present. During COVID19 the hearing is being held remotely. While these are uncertain times, the hearing is normally scheduled in four to eight weeks. The divorced is usually finalized in within 14 days.

The information above depends on a settlement being reached and the parties truly working together. Each case is different. Contested cases can take anywhere from a year or two, or more. Again, involving a lawyer once you start considering a divorce will help you have the information you need to manage your divorce as efficiently as possible.

You’ve Decided to Mediate Your Divorce. Should You Bring a Lawyer?

Deborah ReiserDeborah Reiser

You’ve decided to mediate your divorce case. You wisely decided to avoid the expense, acrimony, and uncertainty of a contested court proceeding in favor of a negotiated resolution with the assistance of a neutral third party. You’ve selected a mediator, and now are faced with the choice of whether you should go to mediation with or without your lawyer.

There are pros and cons to both approaches, and the decision deserves thoughtful consideration.

When You May Not Want an Attorney

Obviously, mediating without two additional lawyers present is, at first, less expensive. The math is easy — you are paying two fewer professionals for the real time of mediation. If you and your spouse are able to communicate civilly, if the issues are not mired in complexity, if positions are not hardened in concrete, and if both sides recognize the wisdom of compromise — then, by all means, consider meeting with the mediator alone.

When You Should Consider Bringing an Attorney

On the other hand, what if one spouse holds all the advantages, financially and otherwise?

  • What if one spouse is unable to appreciate the value of achieving a resolution even if imperfect?
  • What if the complexities of resolution are outside your comfort zone?
  • What if there are issues which require specific expertise, such as identifying and valuing business interests? Or dividing retirements and pensions?

Having your lawyer present in real time can make the difference between success and disaster.

Remember: The mediator is a neutral. S/he cannot offer legal advice to either party; rather, the mediator’s job is to get the parties to agreement. There may well be issues where you need actual advice about the wisdom of your position, about the risks and exposure you face with different choices, or about whether your negotiating strategy is even prudent or smart.

As a neutral, a mediator should not say to you “You would be unwise to do this, this is a mistake for you.” If your lawyer is present, you can address strengths and advantages, pitfalls and risks in real time. Otherwise, stopping the mediation to consult with your lawyer and then re-grouping not only slows progress; actually, the fits and starts can easily cost more money over the long run.

Similarly, suppose you reach a tentative agreement in mediation. The mediator should advise you to consult with your own attorney before signing what will be a binding contract. Suppose further that on consultation with your lawyer you become aware of a major issue you failed to address, or worse, resolved in a manner that can actually cause you harm. Then you have to return to the negotiating table. You’ve lost time, money and quite possibly have created a more intransigent bargaining position on the other side.

At the very least, you should consult with your own lawyer In advance of mediation in order to become educated as to your rights and obligations under the divorce law, to think through your goals and areas of potential compromise, and to “game-plan” your negotiating strategy. Discuss with your lawyer whether to have him/her accompany you to the actual mediation. Then, and only then, decide what course is best for you.

Not All Dollars Are Equal: Which Assets Are Most Valuable in Divorce?

AvatarErik Arena, Principal

One thing is usually certain in the aftermath of a divorce: You’ll experience a reduction in net worth and in standard of living. This is unavoidable as one household becomes two.

But just because it will happen doesn’t mean you can’t take steps to lessen the blow. By choosing wisely and unemotionally when dividing the marital assets with your spouse, you can minimize the reduction in your net worth post-divorce.

Not all Dollars Should be Valued Equally in Divorce

Although all asset transfers between spouses (incident to divorce) are tax-free events, some of those assets may later be subject to sizeable income and/or capital gains taxes that must be paid entirely by the receiving spouse, significantly diminishing their net value. It is imperative that these consequences be known and understood by you and your attorney so that you don’t end up with less than your fair share of the net assets.

Which Assets and/or Dollars are Most Valuable?

Value means many different things to many different people. When dividing assets between spouses, it is important to keep in mind the classes of assets identified below, which vary in net present value. If you and your spouse are trading assets from different classes, adjustments may need to be made to ensure you are not losing fair value.

  1. Cash is king! It is both liquid and not subject to any further taxes. It doesn’t get any better than that!
  • Cash, funds in checking and savings accounts, and the money market portion of any investment accounts.
  • Home sale proceeds. If the family home is sold as part of the divorce, those proceeds are also liquid and not subject to further tax (as any capital gains due will be paid at the time of sale, after application of your combined spousal $500,000 capital gains exclusion).

2. Other assets not subject to any further tax. Generally speaking, the replacement cost for these items exceed their private re-sale value. Retaining those items as part of your divorce will mean less dollars spent by you post-divorce to get yourself situated.

  • Furniture and home furnishings.
  • Automobiles.

3. Assets subject to capital gain but not income taxes. These assets will fluctuate in value and will be subject to capital gain taxes if you need to sell them to generate cash. The order of priority in each case will vary depending upon the tax basis of each asset or holding:

  • Stock and/or mutual fund holdings in investment accounts. These may also throw off interest and/or dividends, which, in some cases, is taxable income to you.
  • The family home. Depending upon the home’s tax basis, you may face a hefty capital gains bill if you assume ownership and then sell it later. Further, at the time of that sale, you’ll only be able to use your own $250,000 capital gains exclusion, as opposed to the combined $500,000 exclusion for spouses.
  • Other real property not used as primary residence. Any capital gains problem is compounded with these properties because there is no applicable capital gains exclusion.
  • Stock options
  • Vested restricted stock
  • Some artwork

4. Assets subject to income tax at the time of exercise or withdrawal. These assets will also fluctuate in value. However, when it comes time to withdraw from them, you’ll be taxed on those withdrawals and/or distributions at your ordinary income tax rate in the year in which you take the distributions. Accordingly, the present value of retirement assets, when compared to cash assets, must be adjusted for both present value (as cash is available to you now, whereas retirement, if drawn early, is subject to an additional 10% penalty tax) and after-tax value.

  • Most employer sponsored retirement plans (note: IMF and World Bank pensions are not taxable)
  • IRAs
  • Certain pension plans
  • Retirement annuities

Each divorce is different and there can be legitimate reasons why assets are divided a certain way. The information above is intended to inform and educate you, so you can use that knowledge to move forward in a strategic fashion.

Litigation vs. Negotiation – Which Path Is the Right One for You?

Chris RobertsChris Roberts, Principal

Most of us have seen one of those dramatic courtroom movies that glamourize the court process – perhaps Tom Cruise’s fiery cross-examination of Jack Nicholson in A Few Good Men, or Gregory Peck’s moving closing argument in To Kill a Mockingbird

But litigation, the contested court process by which parties resolve their differences, is nothing like the process we see in our favorite legal thrillers. It is a long, slow, and expensive process. Many people consider it the most painful, difficult process of their lives.

What does the process entail?

Unless the parties can resolve the disputed issues in advance of trial, litigation usually culminates in a bench trial, where a single judge considers the evidence and arguments presented, and issues a ruling. 

The process typically begins with a scheduling hearing, where the case is scheduled in calendar-like fashion, including deadlines for the completion of the discovery process, perhaps a date by which the parties must participate in mediation or another alternative dispute resolution process, and a trial date.

Depending on the jurisdiction, the process can take a year or longer. And it is invasive. Discovery alone can include dozens of document requests, written questions that must be answered under oath, and potentially depositions of the parties, which in Maryland can last as long as seven hours straight.

At trial, each party presents his or her evidence, including witness testimony and the introduction of documents. At the conclusion of the trial, the judge renders a ruling and, ultimately, a divorce decree.

So why would anyone subject themselves to this?

You might be thinking, “This process sounds terrible, why would anyone subject themselves to this?”

For one, it guarantees an end to the process. If your spouse or co-parent is unwilling to engage in an alternative process to resolve your issues, litigation might be your only option. The court process may be slow, but it moves predictably and inexorably to a final result, after which you can go on with your life.

In some cases, there are issues on which the parties truly cannot reach agreement. In the child custody realm, this could include child support, a parent’s relocation, mental health or substance abuse issues, or physical or psychological abuse of a child. In a financial context, there may be a dispute about alimony, a party’s actual income, the value of a party’s business, or whether a party’s trust interest or inheritance should be considered in the resolution of financial issues.

What are the alternatives?

Parties are always free to resolve their issues without resorting to a contested court process.

There are a number of alternative dispute resolution tools. Some of the more common approaches include:

  • A traditional negotiation involving attorneys, where parties develop settlement offers with the assistance of their counsel, who then negotiate on behalf of their clients to resolve the issues
  • Mediation, a voluntary process where the parties meet with each other and a neutral, third-party mediator, often with counsel present or advising them
  • Arbitration, in which a third-party decision-maker considers a presentation of evidence and argument from each party and renders a binding decision

All of these approaches are generally less expensive and quicker than the litigation process. And this is not an exhaustive list of the out-of-court approaches available to people to resolve their divorce or child custody issues.

Which process is right for me?

In almost all divorces, parties are well served in the early stages to consider an out-of-court process.

Which process will work best for you depends on a multitude of factors, including the dynamic between you and your spouse or co-parent, the substantive issues in the case, the financial issues and wherewithal of one or both parties, any external time pressures that might be involved, and the professionals assisting the parties.

Do I have to pick just one process?

No. Typically, it makes sense to stick to one out-of-court process at a time, and hopefully your first attempt at alternative dispute resolution does the trick. But if not, you can always move to another process, including litigation.

It is important to understand that you can continue in a non-litigation process at the same time a litigation is pending. In fact, courts encourage these continued efforts to resolve the issues out-of-court, even as the court process unfolds. Think of negotiation and litigation as running on parallel tracks. They are separate and distinct processes, but they are connected, and one process often can impact another, ideally in a way that benefits your position and hastens resolution.

Welcome to Your Source for Divorce Law

The Divorce/Family Law Group at Lerch, Early & Brewer is proud to present our new Divorce Law Source blog.

In an age where Google searches and web browsing are the go-to for most people to find information about everything, we are thrilled to provide an easily accessible one-stop shop for all things family law and divorce.

Featuring content authored by each of our accomplished and skilled family law attorneys, we encourage you to use this forum to find the answers to commonly asked legal and practical questions our clients confront pre- and post-divorce, review explanations and analyses of pertinent legal concepts and principles, and receive updates on new practices, rules, laws, and the family court system in Maryland and D.C. We will be featuring new posts and content each week. We look forward to welcoming many regular followers and invite you to recommend desired topics for future posts. Please subscribe to the blog on the right-hand side of this page.

Lerch Early’s family law attorneys represent clients in every facet of family law including divorce, custody, child support, alimony, property division, modifications of custody, child support, and alimony, prenuptial and postnuptial agreements, litigation, divorce and custody settlement agreements and alternative dispute resolution, guardianship, and adoption. For more information, please check out our website.

We hope to see you soon on our blog!

In Health,

Heather Collier and Erik Arena
Co-chairs, Divorce/Family Law Group