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 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.

On December 23, 2009, the Oregon Court of Appeals filed its decision in Baker and Andrews, a dissolution of domestic partnership case.  The entire opinion can be found here:  http://www.publications.ojd.state.or.us/A135564.htm.

                Baker and Andrews were an opposite sex couple who lived together for many years.  Baker appealed the trial court’s order that no domestic partnership existed and from an order of the court awarding Andrews sanctions against both Baker and her attorney.  The court of appeals agreed with the trial court with respect to its ruling that no domestic partnership existed, but reversed the trial court with respect to its ruling on sanctions.

                They lived together for 24 years, and shared a home and bed and raised their own separate children to adulthood in the home during that time.  They maintained separate bank accounts. Baker did some work outside of the home and Andrews owned a business (that Baker did some work for without pay).  Baker also worked as a homemaker.   They had no agreement as to their financial relationship.  Andrews added Baker to the title on the house in 1994, but Baker then signed a quitclaim deed releasing her interest in the home in 2004.  She also filed for SSI disability, stating in her application that she did not expect anything from the home and that she lives financially separately from Andrews.

                The trial court did not find Baker to be credible, a finding upon which the court of appeals must rely. 

                Oregon does not recognize common law marriage.  Under the court’s decision in Beal and Beal and subsequent cases, however, Oregon has a body of case law that recognizes that where parties intend to create a domestic partnership that the court can then equitably divide their property and debts.  The court of appeals describes this as follows:  “In general, an equitable property division on dissolution of domestic partnership is appropriate where the parties’ intent to share assets and expenses is shown by evidence that they have jointly purchased, built, or maintained property, held joint accounts, and made substantial economic and noneconomic contributions to the household for mutual benefit.” There cannot be an award of spousal support, nor can there be a claim for attorney fees made in such a proceeding.

                Here the court of appeals found that there was insufficient evidence of financial commingling sufficient to support Baker’s claim of the existence of a domestic partnership.

                Even though a party has no entitlement to attorney fees in this form of proceeding, if the other party files a frivolous case then the offended party can seek sanctions under Oregon Rule of Civil Procedure 17.   The court of appeals did not reach the issue of whether the filing was in fact frivolous, because it decided that the trial court’s manner of assessing sanctions was legally improper.  The matter was remanded to the trial court to decide if sanctions were warranted under ORCP 17.

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.

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.

The Institute for Divorce Financial Analysts published the results of an interesting survey on June 11, 2009. In a collaborative case or a traditional case, a Certified Divorce Financial Analyst™ (CDFA™) can forecast the long-term effects of the proposed divorce settlement. A CDFA can also help attorneys by helping the client make financial sense of proposals, and empower their clients with the knowledge they need to make smart financial choices. An April 2009 survey of CDFA’s indicated that the ways in which divorce proceedings are handled has changed substantially with the dip in the stock market and home prices. The survey found some clients in an indefinite holding pattern while waiting for the economy to recover. Clients were also considering non-traditional, creative solutions to property division problems, such as sharing the marital home post divorce until the home sells or the market improves. A link to the article published by the IFDC is here.

As a Portland Oregon based divorce law firm, the attorneys at Stephens Margolin P.C. have seen the impact of the housing crisis and the declining stock market on clients. In recent litigation, we have seen courts ordering one spouse to pay the other to keep a house that is underwater. Parties contemplating divorce are well served to consult with lawyers trained in both traditional litigation and collaborative divorce to ensure that all resolution options are available.

The New York Times published an article regarding a top London divorce attorney named Raymondy Tooth. The article describes how Mr. Tooth makes a living representing the wives of wealthy British men.
The article describes a case in which Mr. Tooth represented Ms. Myerson, whose husband was worth around $44 million at the time of the divorce. Ms. Myerson elected to take less than half of the assets in case and some properties, while Mr. Myerson received $21.7 million worth of stock in his investment fund. Mr. Myerson was very disappointed when, some months later, the global economic downturn reduced his stock holdings by 90%. He filed a petition with the court to overturn the property distribution and make his ex-wife return the property that she received. The court declined to do so.
Under Oregon law, property distributions in a divorce cannot be modified post-judgment, as opposed to support awards and custody/parenting time determinations. It is crucial to have competent legal counsel’s advice in deciding on a strategy for division of assets. Mr. Tooth considered the volatility of the market, while Mr. Myerson just looked at the bottom line, to his misfortune.
If you have questions about the division of assets and property awards in an Oregon divorce, contact Stephens Margolin P.C. for a consultation.