Kevin and Kate separated after fifteen years of marriage.   Two months after their separation, Kevin took his girlfriend on an all expenses paid vacation to Hawaii. While there, he purchased several pieces of jewelry for her. When Kate learned of these expenditures she was furious and immediately contacted her attorney to see what action could be taken. 

Although the general rule is that property not in existence at the time of the divorce cannot be divided as marital property because it no longer exists, there is an exception to this rule.   When one spouse uses marital property for his or her own benefit for a purpose unrelated to the marriage at a time when the marriage is undergoing an irreconcilable breakdown, and it is used with the intention of reducing funds available for division between the parties, dissipation may be found.

At trial, Kate must prove that Kevin used marital funds for other than a family purpose with the intention of reducing the funds available for equitable distribution.  The burden then shifts to Kevin who must show the expenditures were appropriate.  If he cannot prove that the funds used were for marital or family purposes the court may give Kate a monetary award to make things equitable. While there are exceptions to the rule, gifts to third parties especially when they are not the parties' children or close family members, is generally considered dissipation.  

Dissipation is not easy to prove.  Before spending a lot of time and money on the issue, Kate and her attorney should consider the likelihood of being able to meet their burden of showing that 1) funds were used and were not used for a family purpose and 2) the funds were used solely for the purpose of reducing the marital funds to be equitably divided.  Kate may want to start by reviewing credit card statements and bank account withdrawals to see what funds were used and where the funds were used.  Kate and her attorney may also want to consider whether it is worth the expense of retaining a forensic accountant to help identify missing or used assets but before incurring such an expense they should weigh and balance the likelihood of being able to prove that the funds were used solely to reduce the assets to be equitably divided.  If the funds were used for any other purpose, then no dissipation can be found.    

For more information read: What Is Dissipation Of Assets In Divorce And What, If Anything, Can You Do About It? By Jeff Landers, November 1, 2016 Forbes.com

     Nancy and Bill are getting divorced.   They have no children but they do have a Golden Doodle, Alfie that they purchased together after they were married.   Nancy and Bill think of Alfie as their child, and they both want Alfie to live with them.   Nancy wonders if she can file a Motion for Custody of the family pet. 

     Under Maryland law, Nancy cannot file a Motion for Custody.  Alfie is not considered by law to be a child, or child-like even though Nancy and Bill think of Alfie as their child.   In Maryland, a pet is considered tangible personal property.  If the pet was purchased during the marriage, using marital funds, as Alfie was, then the pet is marital personal property.  Nancy and Bill must either reach an agreement regarding Alfie, or Alfie may be sold like all of the other personal property they own together. 

     Nancy Kay, in her article “ Who Keeps the Family Dog”, suggests 5 things divorcing spouses like Nancy and Bill should consider when deciding who shall keep the family pet:

        1.         Who has a flexible work schedule or access to a reliable person who can fill in for them to care properly for the pet while they are at work.

        2.         Who has the financial means to provide for the pet throughout the expected length of the pet's life span?

3.         Who has the majority of parenting time with the children who are attached to the family pet?

4.         Has either of you neglected the pet's basic needs or acted abusively toward the pet?

5.         Who will have more space for the dog to exercise and play following divorce?

            Some States are enacting legislation that allows judges to decide custody of the family pet using the “best interest” doctrine just as they do when deciding custody of children, or determining that the pet should go with the children.  We will see what changes, if any, develop in Maryland over the next few years. 

(12/7/15)

Can You and Your Spouse Divorce and Still Run a Business Together?

What happens when a couple decides to divorce and they own a business together?  Typically, one party buys the other party out of the business and the bought out party leaves the business immediately, or they stay on as an employee for a short period of time while they transition to new employment and/or new employees can be trained to take over the bought out spouse’s role in the business.  However, can a couple continue to run a business even though they are no longer husband and wife?   Some would say, no, one party should step aside.  Bryan Borzykowski, in his article “When Couples Divorce But Still Run the Business Together” published in the New York Times New York edition and on NewYorkTimes.com, suggests it can be done, but not without effort from both parties. 

You may be wondering how can you continue to run a business with someone you are divorcing?  Not everyone’s situation will allow for a continued business relationship even though their personal relationship has failed.   But, if you are considering continuing your business relationship there are a few issues that must be addressed.

First, you must have respect for one another.  Without mutual respect, the business relationship will not succeed.  Even if you are angry with your spouse you can make the business relationship work if you have trust and respect. 

Second, it is important to communicate clearly and do what you each agree to do for the business.  A therapist can assist in working out problems when communication becomes difficult. 

Third, sign a Business Agreement.  Often, married business partners do not have a written shareholders agreement.  It is essential to have an agreement that sets out the details of your business arrangement including what happens when one partner wants to leave or sell the business.  

 Finally, you must assure your employees that you both are committed to working together.  Often times, employees take sides when a marriage disintegrates.   If you are going to continue your business relationship and have it work, it is important to tell your employees together that although your marriage is ending, the business will continue as usual.   Being upfront with your employees will alleviate rumors and reinforce job security. 

     (2/10/13)