ORS 107.093 provides that when a petition for marital annulment, separation or dissolution is filed and upon service of summons and petition upon the respondent, a restraining order is in effect against the parties.  Violation of the statute is punishable via contempt proceedings.

On April 14, 2010, the Oregon Court of Appeals filed an opinion in Frazier and Frazier. The entire opinion can be viewed here:  http://www.publications.ojd.state.or.us/A137220.htm

The case dealt with how to address a party’s violation of the statutory asset restraining order.  After filing for divorce, wife completed a refinance of the marital home.  The refinance violated the statutory asset restraining order.  The trial court valued her withdrawal of equity as $60,000, based upon husband’s testimony.  The trial court decided that the full amount of her benefit from the refinance should be awarded to husband out of the division of assets as an equalizing judgment.

The court of appeals held that the actual benefit to wife was only $47,000, but the trial court’s ultimate determination as to what property division is just and proper in all circumstances is a matter of discretion that the court of appeals will not disturb unless the trial court misapplied the statutory and equitable considerations that ORS 107.105 requires.  The court of appeals held that husband should receive a benefit of $47,000 out of the division of sale proceeds from the house.

The order provides for certain exceptions.  It is important to consult a lawyer when initiating a divorce proceeding or being served with divorce paperwork with regard to how the asset restraining order affects you.  Failure to consult an attorney and properly abide by the order can have harmful effects.  Also, visit the following link for a prior post by Sean Stephens on this issue:  http://oregondivorceblog.wordpress.com/2007/05/15/to-sell-or-not-to-sell/

The Oregon Court of Appeals filed an opinion in Stokes and Stokes on March 31, 2010.  The entire opinion can be found here:  http://www.publications.ojd.state.or.us/A136795.htm  The case addressed the treatment of the following issues:  1.  Whether military benefits that are non-taxable can be included in gross income for child support calculation purposes;  2.  What the proper valuation date for a pension is; 3. The proper method to divide a pension interest; 4. Whether payment for other debts can be credited against support obligations.

Husband is in the military and receives BAH and BAS payments which are included in his monthly paychecks.  He argued that the court should not consider those benefits as income for child support purposes since they are non-taxable.  The court of appeals did not agree and held that pursuant to OAR 137-050-0340 which defines gross income as “income from any source including, but not limited to, salaries, wages, commissions, advances, bonuses, dividends, severance pay, pensions, interest, honoraria, trust income, annuities, return on capital, Social Security benefits, workers’ compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, prizes, including lottery winnings, and alimony or separate maintenance received,” that the BAH and BAS payments were gross income.  It did not matter that those payments were non-taxable.

Husband, as a member of the military, is entitled to a military pensiion after 20 years of service.  At the time of the divorce he had not completed 20 years of service, but testified that he would complete said service.  Under Oregon law, the marital portion of husband’s pension must be calculated as a fraction of the entire actual pension, rather than as a fraction of a hypothetical pension amount.  The trial court had awarded wife a potion of the pension based upon a hypothetical retirement date prior to his full srevice.  The “time” rule is typically used to calculate the marital portion of benefits under a defined benefit retirement plan.  Under that rule, the marital portion is determined by multiplying the total actual pension benefit by a fraction, the numerator of which is the number of years (or months) of service during the marriage and the denominator of which is the total years (or months) of employment.  Wife’s interest in the pension should be based on the total pension benefit as of the date of retirement, determined either by way of an actuarial present value or through a division of benefits as they are distributed.

The court used the date of the parties’ separation to determine the marital portion of the pension.  The court of appeals held that the proper date is the date of dissolution, not the date of separation.

The court of appeals also held that in view of the fact that wife is entitled to a share of the marital portion of husband’s retirement benefits, and because those benefits would terminate if husband were to predecease her, it is appropriate that wife’s interest be protected by the provision of survivor benefits in an amount sufficient to cover wife’s share of the marital portion of the pension, with the parties to share equally in the cost of the annuity. 

The trial court ruled that husband satisfied his pretrial child and spousal support obligation via payment of the parties’ credit card debt.  Under Oregon law, a court cannot forgive a past-due support obligation.  Wife was awarded temporary spousal and child support in order to provide her with assistance in meeting her monthly expenses during the pendency of the proceeding as sset forth in ORS 107.095.  The trial court should not have credited husband’s obligation by his payment of credit card debt.

This case shows that a trial court can make myriad errors in its decisions.  In this case, the divorce was finalized by the trial court years prior to the court of appeals rendering its decision.  The issues in this case were complex.  In complex cases, the parties are frequently unable to reach a settlement due to their lawyers not being sure of a proper result.  Obviously, the alternative of throwing the issue into the hands of a trial court was not helpful in this case.  It is important to make sure that your lawyer has a firm grasp of the law and is able to property understand its application to the facts of your case and to the trial court.

The Oregon Court of Appeals published an opinion in Fields and Fields on March 24, 2010.  The entire opinion can be viewed here:  http://www.publications.ojd.state.or.us/A141040.htm

The case dealt with the treatment of wife’s separately held company.  Wife was given the company by her parents prior to the marriage.  She kept the company in her sole name throughout the marriage.  Husband provided a significant amount of work for the company and the parties used the company’s income during the marriage.  The trial court ruled that husband was not entitled to a award to equalize the value of the company to wife. 

The court of appeals held the the trial court was mistaken and, that while wife had rebutted the presumption of equal contribution with regard to her initial acquisition of the property that she had not done so with respect to the company’s appreciation during the marriage.  ORS 107.105(1)(f) requires that the division of marital property be “just and proper” under the circumstances.   Marital assets are subject to a rebuttable presumption of equal contribution and ownership, which applies to property acquired by a spouse by gift during the marriage.   The appreciation in value of a separately held asset is a marital asset that is also subject to the rebuttable presumption of equal contribution.  A spouse rebuts the presumption of equal contribution with respect to the appreciation of a separately held asset if he or she proves that the other spouse did not contribute either directly or indirectly to its appreciation.  Here, wife could not rebut the presumption.

The court of appeals awarded husband one half of the appreciation of the company during the marriage.

The Court of Appeals decided the case of Bolte and Bolte on February 17, 2010.  The case is an appeal from a divorce trial.  The Court of Appeals modified the spousal support award made by the trial court.

Husband and Wife were married for 22 years, and separated a few years prior to trial.  Wife gave up employment opportunities of her own to further Husband’s career.  The parties had a household income of $14,000 per month, consisting of Husband’s income of $10,700 and Wife’s income of $3,300. 

Husband argued that his income should be only $7,900 per month because the remainder was from a position that he termed temporary.  Husband also argued that Wife’s income should be presumed to be higher because she was underemployed.

Trial court awarded indefinite support in the amount of $1,500 per month. 

The Court of Appeals held that Wife was not underemployed as she was already working full time and is not, for spousal support purposes, required to work at the highest possible salary.  The amount of spousal support must be “just and equitable” under the totality of the circumstances.  Specifically, ORS 107.105(1)(d)(C) provides a nonexclusive list of factors that we consider in establishing a just and equitable support award for spousal maintenance support, which include (1) the duration of the marriage; (2) the standard of living established during the marriage; and (3) the parties’ age, income and earning capacities, training and employment skills, work experience, and financial needs and resources.  The Court of Appeals modified the support award up to $2,500 per month indefinitiely because “without a substantial award of spousal support, wife’s standard of living following the dissolution will be significantly diminished when compared to the parties’ predissolution lifestyle, which was based on a monthly household income of approximately $14,000.”

The opinion can be found here:  http://www.publications.ojd.state.or.us/A139055.htm

The courtroom is not the only path to a good resolution. Divorce mediation is a wise choice in most cases. I recently made an appearance in a county which allows for hearings on temporary custody and parenting time before the parties mediate.  The opposing attorney had filed for temporary custody without asking for mediation. We asked the opposing attorney to mediate prior to the hearing, but they refused. I would have been happy to meet in our conference room and talk about some creative solutions to the problem, but they refused.  Rather than mediate or negotiate, a hearing was held. The result was substantially worse for the moving party than they expected, and perhaps even than they could have reached in mediation. Rather than a cooperative solution being reached voluntarily, the court imposed a decision on the parties that was harmful to the moving party.

Good divorce lawyers are dispute resolution experts. They are trained in negotiation, cooperative face to face meetings, collaborative law, mediation, and have trial skills. When asking a lawyer questions before you hire them, make sure to ask about how they resolve disputes. If court is the primary answer, you may be wise to look elsewhere.

The Indian court system does not properly recognize divorces issued in the United States.  A divorced wife can flee on her own, or even worse with the parties’ children to India.  Once there, she can file dowry harassment charges against her “ex-husband.”  In addition, India is not yet ratified the Hague convention and will not act to send abducted children back to the United States. 

There has been a rise in the number of dowry harassment cases filed against non-residen Indians (NRIs).  India has been used as a haven for ex-wives who are disatisfied with the result of their United States divorce case.  Once in India they utilize dowry laws which are peculiar to the Indian legal system and do not have a US counterpart. 

Spouses who are NRIs or are divorcing NRIs should discuss their case with a competent attorney who understands these complex international law issues.

We consult with many people with Oregon divorce and family law cases.  One of the most painful questions to hear is when someone who settled the property part of a divorce asks about renegotiating the property distribution.  The question is painful because the answer is harsh. Property divisions, once finalized in a judgment, are non-modifiable.  The court has no authority to reopen property division post divorce just because you are unhappy with how things were divided.

There are some limited exceptions where the court can revisit part of a property award.  One exception is for “omitted” assets.  The court has the authority under ORS 107.452 to reopen the property distribution if a significant asset is left out of the division. What authority the court has depends on whether the asset was omitted accidentally or concealed and omitted intentionally.

It is critical to make sure you are aware of the nature and extent of the marital property, and that you have good advice from a lawyer about what property division is fair in your case. You should consult with an experienced divorce lawyer before signing any final property agreement.

Few property claims cause as much contention as a claim to divide a personal injury settlement in a divorce. Oregon’s Court of Appeals  treats personal injury claims as a form of property. Timing matters in determining how a claim may be divided. A claim from a post separation injury should go to the hurt spouse. The court can divide a pre-separation claim that is unresolved at the time of separation. The court can also divide personal injury settlements that were received during the marriage. Settlements received during the marriage are marital assets and subject to the presumption that both spouses equally acquired the asset. A spouse may try to rebut the presumption that the non-injured spouse contributed to the acquisition of the claim.  Even if the injured spouse is successful in rebutting the presumption, the divorce court can still give part of the settlement to the non injured spouse if it is “just and proper” in all the circumstances. Personal injury claims may have multiple components, such as lost wages, pain and suffering, loss of spousal companionship, and medical payments. How the settlement is characterized may have an impact on the court’s division.  If your case involves a substantial personal injury claim, consult with an experienced family law lawyer about your options.

The division of personal property in a divorce can be one of the most expensive, emotional, and wasteful parts of a case.  Parties will often spend thousands of dollars arguing over a very inexpensive piece of personal property. 

Personal property, meaning furniture, art, family photos, pets, and other general property, in a divorce is treated no differently than the division of other assets.  A dollar value figure is placed on the property and the allocation of property is dealt with as part of the general division of assets and debts.  For example, if all of the personal property is worth $20,000 and one party takes all of it, they would owe the other party $10,000 as either a cash payment or out of the division of some other asset or by taking on a similar amount of debt.

The better way to deal with the division is for the parties to agree on who takes what piece of furniture and not assign a dollar figure to anything.  This can be more complicated with valuable artwork.  Family photos are generally given to one party with the other party having an option to make copies.

If there is a clear dispute over which property each party wants, the easiest method is to have the personal property appraised.  The appraiser will make a list of all property and assign dollar values to each piece and then the judge can make a determination of how it is divided. 

Some property is not included as a marital asset.  Generally this happens with jewelry or other clear gifts that were intended to be given to the other party and not shared.  In that case, there will be no offset and the property will go to the party whom received the gift.  One example is that a wedding ring always stays with the party who received it.

A Forensic Accountant can be a great help to you and your attorney to assist in communication and explanation by creating, using and explaining visual displays for financial details.

Communication is fundamental to any human interaction. The ability to communicate clearly, concisely and in a way one’s audience can readily understand is an extremely important skill.

During a divorce, there is a need to communicate with opposing parties, attorneys, judges, and people in general. The stress and distractions of divorce can make communicating effectively a challenge. This is particularly true when trying to communicate the significance of property, income, and other information needed in divorce proceedings to attorneys, soon-to-be former spouses and possibly a mediator or judge.

Clearly laying out key ideas and arguments supporting divorce matters can be critical to successful negotiation or convincing the judge. Visual tools such as tables, charts and graphs can help make and emphasize key points. They can also be particularly helpful for laying out financial information. Clear communication can help achieve a satisfactory solution as soon as possible as both sides can clearly see the facts and figures.

Some of the areas where a CPA and forensic accountant can help develop and illustrate financial matters in a divorce include:
• Preparing a Marital Balance Sheet: Developing and presenting in tabular form a listing of assets and liabilities of each spouse before, during and after marriage and apportion assets and liabilities to each spouse based on the date and nature of property acquisition
• Determining Spousal interest in Marital Assets: Calculating the percentage owned by each spouse based on the timing of acquisition, use of joint funds to add to assets or to fund costs of assets and showing this information in a table or on a graph. For example, a 401(k) has a value at marriage, marital assets are used for additional investment, and then, after separation, individual funds add to the 401(k). During the period of ownership there are price fluctuations. The total marital value would need to be apportioned to reflect all the inputs. A second example, a home is owned by a spouse at date of marriage, it is rented during the marriage, but marital assets are used to pay shortfalls. Both the original owning spouse and the married couple now have an interest in the home. A third example is when spouses have separate checking accounts and each pays certain expenses related to a marital asset with one spouse paying more (possibly because that spouse earns more or has greater assets than the other spouse) creating a disproportionate interest in the asset.
• Calculating Controllable Cash Flow: Determining the total value of compensation, including perks and payment of personal items with business funds when a spouse owns a business and illustrating that information using a bar chart, pie chart, table or graph.
• Performing a Needs/Lifestyle Analysis: Calculating monthly needs for alimony payments and presenting this information in tabular form.

Other related services a forensic accountant can provide include:
• Valuing Spousal Interests in Businesses
• Analyzing personal expenses of business owner who denies income and available cash flow. Analyzing the personal expenses of a business owner who states there is little or no income to assist in proving the existence of positive cash flow.
• Tracing Assets: 1. Tracing the source of funds used to purchase assets during marriage; for example, one spouse owns a house at marriage, it is deemed separate property. That house is sold and the proceeds are used to buy stock, it would remain separate; 2. Following assets/income to determine if additional marital assets exist.
• Searching for Undisclosed Assets

When you want to communicate core financial issues in any dispute, contact a forensic CPA to help improve communication and facilitate resolution by providing clear visual displays of financial matters.