THE INTERSECTION OF MATRIMONIAL,
REAL ESTATE, ESTATE AND TRUST LAW
For those seeking a divorce, the obvious first move is to hire a divorce attorney. But many divorce cases are complex, involving real estate, estate planning, trusts, and other issues. In this age of legal specialization, no one attorney knows all aspects of every discipline, therefore there is a great advantage to having a team of legal resources at your disposal. Attorneys who can work together to manage all the disparate aspects of divorce will make for an easier transition and a more satisfying financial outcome for all parties. Here are several common considerations in a typical divorce today.
Most postnuptial and divorce separation agreements include provisions for the disposition of the family home and other real estate. A matrimonial attorney will negotiate the equity split for each party, along with other assets and liabilities. Some couples may agree to keep their interests in the property until children grow or for other reasons, but most often one spouse will move out. When that happens, a real estate attorney will need to negotiate securing the departing spouse’s interest through a mortgage or judgment lien.
What if one partner wishes to buy a new property in his or her own name and experiences credit issues as a result of an existing mortgage? This year, changes in the tax code have brought an added wrinkle to that process. Lenders used to rely on tax returns to show alimony paid to loan applicants. But as of January 1, 2019, alimony is not taxable to the payee (nor deductible for the payor), and therefore tax returns will no longer show a record of receipt of alimony. Lenders are now left having to find an alternative reliable source to confirm an alimony payment. Real estate attorneys know the resources and rules for guiding such purchasers, and can cooperate with matrimonial lawyers to work toward appropriate protections that achieve the goals of both spouses.
Estates are another factor that can play a significant role in matrimonial matters. When the divorcing couple is older, one or the other spouse may be expecting an inheritance from an aging parent or other relative. If that happens, the details of estate administration become relevant and matrimonial lawyers will want to consult with estate lawyers. Considerations include estate taxes, the timing and expense of the administration process, and elections that may be made by executors concerning IRA distributions.
To be clear, courts will not consider the potential inheritances of any party until the person who may leave property to a party has actually died. The simple reason is that any person can always change his or her Last Will & Testament, so there is no actual assurance of inheritance. Similarly, it rarely works for a spouse to make a particular provision in a matrimonial agreement concerning her Last Will & Testament because it is difficult to enforce. Again, either spouse can change a Will at any time. If a party violates a provision of the matrimonial agreement requiring a term in the Will, the only alternative for the surviving party is to make a claim in the court overseeing the Will’s administration. However, it can be important in negotiating a divorce agreement to ensure that a new Will is executed to carry into effect the intentions of the divorce agreement for the benefit of heirs. Matrimonial and estate planning attorneys should work together to coordinate language and particular terms between the divorce agreement and the Will.
Trusts are also frequently involved in matrimonial matters. One or both spouses may be beneficiaries of trusts which they established for themselves or which others established for their benefit. The issue is the degree to which a spouse has control over the distribution of principal and interest for his own benefit as well as any history of distributions to another party. If there is some ability for the spouse to receive a distribution from the trust at the third party’s request, that could become an important factor in the divorce case. Such distributions may result in no alimony being required. Trusts for children established by a parent may substitute for child support payments by a parent. The ability of the trustee of one trust to allocate its assets to a different trust (which may have different provisions for benefiting a party) can complicate the consideration of the trusts. All of these factors can be tricky to work through and are best handled in collaboration between matrimonial and trust attorneys.
The lawyers of Rucci Law Group have strong experience not only in matrimonial law but in all these overlapping areas and are able to identify and resolve issues that smooth the path of what can be a difficult, emotional journey for the parties involved.