Financial mistakes in a Louisville divorce can be costly. Those facing a Louisville or Jefferson County divorce must not only manage the complex emotions often associated with a divorce, but they must also prepare strategies to make sound decisions at each point in the process. There are several aspects of any divorce that can make a substantial difference in your financial well-being after the divorce is completed. This is why it is important to seek the sound advice and counsel of the Louisville divorce and family law attorneys with decades of experience at Dodd and Dodd.
Let’s begin with the initial steps of a divorce and a legal concept known as the “fiduciary duty.” During the initial phase of any Louisville or Kentucky divorce, each party is required to make a complete, detailed, and accurate financial disclosure to include any account, asset, or debt held by either party at the time of the divorce. Each spouse owes the other a substantial responsibility under the law, known as a fiduciary duty. This requires each party to act in the other’s best (financial) interests from the date of the marriage until the date of the divorce. Note that this responsibility continues throughout the process of your divorce. Any omissions, misrepresentations, or efforts to conceal money, accounts, or assets are considered to be a serious legal matter and can result in substantial sanctions or other legal and financial consequences.
A spouse who had hidden a winning lottery ticket from the other spouse during the divorce was ordered to turn over all proceeds from the lottery to their former spouse after the failure to disclose the lottery ticket during the divorce came to light. Likewise, a business owner who went to substantial lengths to hide income and manipulate the value of the company prior to the divorce lost the business entirely to their former spouse during the divorce based upon the sanctions levied by the Judge in that divorce matter.
The division of marital property is one of the most common areas where these issues occur. The first step is determining the nature of each debt or asset held by either or both parties. If an asset or debt was acquired prior to the date of marriage, and no marital funds were used in any manner associated with such an asset, it will probably be considered to be the separate property of the spouse who obtained it. Assets and debts obtained by either or both spouses from the date they were married to the date of separation (with few exceptions, such as a properly structured inheritance) are usually considered marital property. Marital property is to be divided equitably between the parties during your divorce process.
Financial mistakes in a divorce can be costly, and marital property division is a common source of these types of mistakes. What is “equitable” under Kentucky family law? How will an accurate valuation of each marital asset be established? There are many legal ways to establish the valuation of a marital asset. Often, this requires the work of an expert. However, experts can disagree, especially when representing a single party’s interests. Why is valuation so important in a divorce?
Let’s use the example of a business that is considered to be marital property. The equity in the company is to be divided equitably between the former spouses during marital property division. If the business owner wants to maintain sole ownership of that entity after the divorce they must “offset” their former spouse’s marital interest in that company with money or other marital assets, such as the equity in the family home, investments, or retirement accounts. Therefore, the business owner wants the valuation to be as low as possible so that the “equity” in the business is lower. The business owner’s spouse wants the valuation to be as high as possible so that the equity in the business is higher and they receive more value during property division.
The interests of the parties are obviously opposed. This is why the valuation process of each asset is so important during a divorce.
Many parties don’t think about retirement accounts and pensions during their divorce. They mistakenly believe these accounts and plans belong to each separate spouse. This is not the case. Any contributions made to these accounts during the term of the marriage until the date of separation, as well as accumulated appreciation over that time frame, are almost always considered to be marital property to be equitably divided. This requires a complex financial and legal document known as a Qualified Domestic Relations Order or QDRO. A single mistake on a QDRO or failure to equitably divide these accounts during a divorce can literally amount to losses in the hundreds of thousands of dollars.
If your divorce involves substantial assets, retirement account or pensions, or the ownership of a business or professional practice, you need the experienced, proven representation of Dodd & Dodd Attorneys, PLLC. The law firm, formed in 1869, has served the Louisville area for more than 150 years. Your Dodd & Dodd attorney will have decades of experience in family law matters, as well as business and tax-related issues. You won’t need to pay for the advice of multiple professionals to protect your interests. Dodd & Dodd provides each of these areas of expertise within a single firm.
It can be possible for both spouses to use the same financial adviser in order to keep the process of marital property division fair. However, it is not possible for each party in a contested divorce to be represented by the same attorney as it is considered to be a conflict of interest under Kentucky family law.
Financial decisions should never be emotional decisions. We work to help our clients separate the emotion of the divorce from the financial matter at hand, as well as the decision(s) to be made. This ensures our client’s interests are protected as they approach the decisions that will shape their lives moving forward.
It is never wise to rely upon any “oral” agreement with a soon-to-be former spouse. Any agreement between the parties should be reviewed by your attorney and included as part of any settlement agreement or the permanent orders issued by the Judge in your case.
Financial mistakes in a Louisville divorce can be costly. Your experienced divorce legal team at Dodd & Dodd will help protect every aspect of your interests during the divorce process. We help to prepare you for each step in the divorce process. We work to protect your unique goals and objectives while providing sound counsel and advice you can depend upon.
Learn more about how to avoid financial and other mistakes in your Louisville divorce. We invite you to review the strong recommendations of our former clients and the legal industry and contact Dodd & Dodd or call 502-584-1108 to schedule an appointment with one of our attorneys.
