Preventive Family Law for Nevada

What You Should Know About Alimony in Nevada - Part IV

For the last three posts, I've been talking about how alimony is defined in the state of Nevada, what kind of things the court considers when making awards, and what form those awards may take. In this last segment I will talk about some precautions you should know about alimony payments:

First, payment of any periodic or rehabilitative alimony award can be modified upon a showing of changed circumstances. In the state of Nevada this is defined as a change of 20 percent or more in the gross monthly income of a spouse who is ordered to pay alimony.

Second, except in unusually cases, alimony automatically ends upon the death of either party. Additionally, alimony payments also typically end if the receiving spouse gets remarried.

Finally, unlike child support payments, alimony is taxable income to the receiving spouse, it is tax deductible to the payor. If you are the receipient of an alimony award, you need to immediately seek the advice of your accountant or financial advisor to make sure you are putting aside enough money to pay the taxes that will attach to your award.

What You Should Know About Alimony in Nevada - Part III

Alimony in Nevada can take may different forms:

Temporary Alimony (also called alimony pendente lite or provisional alimony) refers to payments made while the litigation is pending.

Lump Sum (also called alimony in gross) refers to alimony in the form of a single and definite sum that is not subject to modification.

Periodic Alimony (also called permanent alimony) refers to alimony payable in weekly, monthly or other regular installments. Periodic Alimony can be ordered either for an indefinite period of time, or until a specific date is reached or a number of payments are rendered. Such as an awarded of 36 monthly payments of a specificed amount.

Rehabilitative Alimony (also called specified purpose alimony, short-term alimony, or transitional alimony) refers to payments made to assist a divorced party to acquire education or training in order to enter or re-enter the workforce. The intent is to help the person become self-supporting.

Generally, to receive an award of rehabilitative alimony, the receiving party must show that the payor spouse obtained greater education or job skills during the marriage and that the receiving spouse provided financial support for the family while the other spouse was obtaining those job skills or that education.

Rehabilitative alimony includes payments for such things as:

• Testing of the recipient’s skills relating to a job, career or profession;
• Evaluation of the recipient’s abilities and goals relating to a job, career or profession;
• Guidance for the recipient in establishing a specific plan for training or education relating to a job, career or profession;
• Subsidization of an employer’s costs incurred in training the recipient;
• Assisting the recipient to search for a job; or
• Payment of the costs of tuition, books and fees for:
The equivalent of a high school diploma;
College courses which are directly applicable to the recipient’s goals for his career; or
Courses of training in skills desirable for employment.

What You Should Know About Alimony in Nevada - Part II

In determining whether an award of alimony is appropriate in any given case, the court in Nevada considers, among other factors, such things as:

·        The financial situation or circumstances of each spouse;

·        The nature and value of the respective property of each spouse;

·        The contribution of each spouse to any property acquired during their marriage;

·        The length of the marriage;

·        The income, earning capacity, age and health of each spouse;

·        The standard of living during the marriage;

·        The career before the marriage of the spouse who would receive the alimony;

·        The existence of specialized education or training or the level of marketable skills attained by each spouse during the marriage;

·        The contribution of either spouse as homemaker;

·        The award of property granted by the court in the divorce, other than child support and alimony, to the spouse who would receive the alimony; and

·        The physical and mental condition of each party as it relates to the financial condition, health and ability to work of that spouse.

Rolling the Dice on Minority Interest Discounts?

The term "minority interest" when used in the context of a divorce settlement generally refers to real estate and/or business interests in which the parties hold less than a majority share.  If you are the owner of the property being valued, you may want to claim a discount against the value of the property.  Whether you think a discount is appropriate, and what amount that discount should be, probably depends upon which side of the argument you are on.

Generally, the argument is made that a discount in value is appropriate because the minority interest owner has lack of control, lack of marketability, and/or has a cost to partition the interest. 

For example, assume that you own an apartment building with four other people.  1 person owns 60% of the property and each of the other owners has a 10% interest.  The value of the property is 1 million dollars.  If you were one of the 10% owners, your spouse will likely argue that your 10% interest is worth $100,000 or 1/10th of the total property value.  However how much control do you have over the property.  If the business decisions are made by majority rule, you may have very little control over the way the property is managed.  Additionally, do you have the right to sell your 10% interest to anyone that you choose, or do the other owners have a say.  If there are restrictions on your ability to sell the property that may effect the marketability of the property.  The argument being that if you had to sell your interest in the building you might receive less than $100,000 since you would have a smaller number of people you could market the interest to. 

The courts in Nevada have allowed discounts for minority interests, however the amount of the discount has varied significantly and seems to depend upon a number of factors such as:

• The size of the interest
• The number of other owners involved
• The practicality of dividing the interest
• The type of business interest and/or use of the land
• The availability of financing for the undivided interest

Before assigning a value to a minority business interest it is always wise to check with a qualified business or real estate appraiser who can provide additional information about appropriate discounts for minority interests.

 

Just Because The Divorce Is Over Doesn't Mean the Work is Done

As a lawyer, I sometimes hear from clients that say "my divorce is over, so why as I still getting charged".  The answer is simple -- while the divorce is over, there are still many tasks to complete.   

Emotionally, there is often a sense of finality to the dissolution of a marriage when the Judge announces that the divorce is granted, unfortunately, practically there are many more steps to complete.  More often than not, they are outstanding orders to process, the final Decree must be entered into the record, evidence in the case may need to be sealed or returned, and there are a whole litany of documents that must be entered to reflect the change in ownership of various property incident to the divorce. 

Typically, your attorney will be involved in preparing and recording quitclaim deeds or other documents necessary to transfer ownership of real property, they may also choose to record promissory notes, deeds of trust or other documents to secure monies owned but not yet paid.  If retirement accounts are involved, your attorney may recommend the preparation and entry of a special order known as a Qualified Domestic Relations Order ("QDRO") to secure your interest in retirement assets.

In addition to the tasks your attorney completes, you need to be involved in a number of matters   including but not limited to: 

1. Notifying creditors to close accounts and/or to remove the other spouse's name
2. Transferring title on automobiles, boats, trailers, motorcycles, etc.
3. Changing names on bank accounts and other financial instruments
4. Changing beneficiary designations on life insurance policies, and financial accounts
5. Removing your spouse's name from, and/or obtaining new home owner's and automobile insurance

Keep in mind that when these issues are not resolved contemporaneously with the conclusion of the divorce process, they tend to get overlooked and sometimes forgotten.  Sadly, it can be be much more difficult (and expensive) to resolve after everyone has forgotten what was intended at the settlement, or after someone has move away, a file has been destroyed or an attorney has retired. 

Common Financial Mistakes Following Divorce #2

Failing to change the beneficiary designations after a divorce or separation can have devastating consequences.  Did you know that the beneficiary designation you list on certain assets such as your insurance policies or your pension plan will take precedence over your will or trust?  Even if your Divorce Decree indicates that you have the right to change the designation, or even if your former spouse waives an interest in your policy that might not be enough, if you do not also change the beneficiary designation. 

Consider the case of Redd v. Brooke, 96 Nev 9, 604 P.2d 360 (1980).  In this case a Husband and Wife divorced, their decree provided that each would assume ownership of any life insurance policies held on their own life.  Husband subsequently died without changing the beneficiary designation of his policy. The Court found that absent unequivocal language in the Decree to remove the ex-wife as a beneficiary under the policy, the ex-wife was still entitled to all of the proceeds from the policy, as Husband had the ability to change the designation but had failed to do so.  Therefore the presumption was that he still intended his ex-wife to benefit from the policy.

One of the biggest misstates people make is forgetting to update their beneficiary designations when they get married, divorced, have children or grandchildren, or when one of their designated beneficiaries passes away.  Any time you have major life changes, make sure you update your beneficiary designations as well.  You can update your beneficiary designations at any time by contacting the company who administers your policy or plan.  Generally, the company will require you to submit your request in writing, and they may require that you use their special form.  There should not be any cost to you to make this change.  Additionally, consider an annual check up with your financial planner or estate planning attorney, so that they can ensure your plan still mets your needs.

Consider the case of Redd v. Brooke, 96 Nev 9, 604 P.2d 360 (1980).  In this case a Husband and Wife divorced, their decree provided that each would assume ownership of any life insurance policies held on their own life.  Husband subsequently died without changing the beneficiary designation of his policy. The Court found that absent unequivocal language in the Decree to remove the ex-wife as a beneficiary under the policy, the ex-wife was still entitled to all of the proceeds from the policy, as Husband had the ability to change the designation but had failed to do so.  Therefore the presumption was that he still intended his ex-wife to benefit from the policy.

One of the biggest misstates people make is forgetting to update their beneficiary designations when they get married, divorced, have children or grandchildren, or when one of their designated beneficiaries passes away.  Any time you have major life changes, make sure you update your beneficiary designations as well.  You can update your beneficiary designations at any time by contacting the company who administers your policy or plan.  Generally, the company will require you to submit your request in writing, and they may require that you use their special form.  There should not be any cost to you to make this change.  Additionally, consider an annual check up with your financial planner or estate planning attorney, so that they can ensure your plan still mets your needs.

Do Your Homework Before Deciding to Keep the House

Deciding whether to keep the house as part of a property settlement in a divorce can be a very emotional issue.  Many times divorcing parents believe that they must maintain the home for their children.  Parents put themselves in a precarious financial position, under the mistaken belief that the home represents stability for their children.  However psychological studies do not bear this out.  There is no evidence that children do any better or worse depending upon whether they continue to live in the former marital residence.  Rather, the key to success for the children is the stability of their parents.

The home often represents a large percentage of the overall marital estate.  For example the value of the house could equal or even exceed retirement savings.  A dependent spouse who keeps the house and gives up retirement savings may be in a difficult situation as retirement approaches.  Sometimes the house is just too expensive to maintain.  In addition, the house may have appreciated during the marriage subjecting it to tax upon sale. 

Careful consideration must be given as to whether keeping the home make good "dollars and cents" as well as emotional sense following a divorce.  In most cases, it is a better decision to have a smaller house, less maintenance expenses, and a retirement account, rather than a large marital home.  Considering discussing this issue with your CPA or a Certified Divorce Financial Analyst before assuming that keeping the home is always a safe bet.

Can My Spouse Take My Retirement?

The short answer to this question is "yes".  Retirement benefits are treated like any other asset.  If the benefit is earned during the marriage, it is subject to division at the time of a divorce.  However only those benefits accumulated during the marriage will be counted.  If you had benefits earned earned either before or after the marriage, those assets are not subject to division. 

Additionally, keep in mind that retirement benefits often require an additional order known as a "qualified domestic relations order" (QDRO) in addition to a decree of divorce to divide a pension. 

What is Mediation?

Mediation is a problem-solving method in which a neutral, impartial third person assists the parties in resolving issues to which there is a dispute.  Mediation is informal and non binding, meaning that you cannot force the other party to mediate an agreement.  The mediator, unlike a judge, is not the decision maker, but instead helps the parties develop options.  The final decision always rests with the parties to reach a resolution that works for both of them.

Mediation is a popular alternative for family law cases because it is confidential, informal, and less expensive than traditional litigation.  Additionally, because the pace of mediation is set by the parties, it can be time-savings to parties as well, as you are not waiting for a court date to proceed.  Finally parties can decide to mediate with their attorney present to provide guidance during negotiations, or without their attorneys present, which can reduce costs. 

Once the parties have reached a mediated agreement, the mediator should prepare a memorandum of understanding and forward it to the parties' attorneys.  It is then the attorneys responsibility to put the agreement in the proper legal format to submit the agreement to the Court to be finalized. 

If you are interesting in learning whether mediation is right for you, contact your attorney, or call the The Herr Law Group for a consultation at 735-4377.

Addiction to Video Game Destroys Marriage

Did you catch the article by Mike Smith featured on Yahoo's home page on February 15th.  The article featured the story of a women who blamed the dissolution of her marriage upon her husband's addiction to a video game.  To read the full article click here.  The women is quoted as saying "It took away all of our time that we spent together. I ceased to exist in his life." Interestingly despite the loss of his marriage, the husband is still playing . . . . .