Penny is getting divorced and she wants to know the value of the marital home for purposes of dividing or equalizing assets.  She wonders how to go about doing this and whether one method is better than another.  

Licensed Appraiser:

A licensed home appraiser is the most reliable method of valuing the marital home.  However, home appraisal is not an exact science and different appraisers will likely have different results for the value of the home.  An appraisal does provide a defensible and carefully documented written opinion of value and is performed by a licensed, certified professional whose business is to value properties. While a licensed appraiser will likely provide the most reliable home value, this type of appraisal can cost several hundred dollars. 

Comparative Market Analysis (CMA):

An option that will cost less than an appraisal is to request a CMA from a real estate professional. A CMA involves comparing Penny’s home with other homes that have sold or have been listed for sale in the area and placing a value on her home based on this evaluation. While providing a reasonable basis for value, a CMA does not take into consideration condition or uniqueness of the property.  While reliable, a CMA is not as solid as an actual appraisal. 

Online Research Tools:

If Penny does not want to involve a third party, she can utilize online research tools, such as Zillow.com, to estimate the value of her home. While this method may be the easiest and least costly, it is also the least reliable. Penny may be reluctant to spend money on a licensed appraiser or on a CMA; however, having a sense of her home’s true value can be invaluable when negotiating a settlement or presenting evidence at trial, especially if her husband does not agree with her value. 

If Penny’s case goes to trial, since she owns the home, she can testify to the value based on her knowledge gained from sources such as the CMA or online research she has done. However, the actual CMA or research documents are unlikely to be admitted as evidence and therefore won’t be viewed by the judge. If Penny has a formal appraisal, the appraisal report can come into evidence if stipulated to by both parties, and if her husband does not agree, the appraiser can testify in court.  It is not unusual for parties in divorce to disagree regarding the value of the marital home. If the case is being negotiated or litigated and two different values are presented, a formal appraisal will carry more weight than a CMA or value determined by a party based on his/her research.

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

Johnny Depp, Amber Heard, and Your Divorce via Time.   This article reminds parties that no matter your financial status it is of the upmost importance to be specific when setting forth terms in an agreement.  Alimony provisions should be specific regarding payment of taxes and receipt of deductions including payments made to third parties.

In a Divorce, Who Gets Custody of Electronic Data? The Lawyersvia New York Times.  A good reminder that you should assume anything you put in a text, email or on social media will show up in court. And, if you have multiple devices that sync, if you leave one device unprotected other persons may gain access to your text, email and other information that you wanted to keep private.

3 Tips For Getting Along With Your Ex-In-Laws via Pop Sugar.   Great tips for getting along with your for in-laws any time of the year but especially during the holiday season.

Your tax returns provide us with information about your income and the source of income, income producing assets, and your investments, as well as whether you over or under withhold taxes from your paycheck.  This information enables us to provide better advice in regard to division of assets and payment of support. Review of your tax returns is an integral part of your family law case; the attorneys at Hess Family Law ask that you provide us with your past tax returns.  How many years of returns will depend on the issues in your case, but almost always we want at a minimum the past three years.

We can obtain copies of tax returns through the court discovery process if you do not have them.  Other ways of obtaining copies of your tax return may include asking your tax preparer to provide copies, or obtaining copies from the IRS.  To obtain a copy of your previously filed and processed tax return with all attachments, including Form W-2, you should complete Form 4506, Request for Copy of Tax Return, along with a $50.00 fee for each tax return requested.  You have to allow 75 calendar days for the IRS to process your request.  Tax Returns are generally available for returns filed for the current and past six years.  On jointly filed tax returns, either spouse may request a copy and only one signature is required.

Oftentimes we don’t want to wait 75 days for the tax return to arrive, and/or it is cost prohibitive to pay $50 per tax return.   The solution may be to order a Tax Return Transcript instead of the actual Tax Return using Form 4506-T.  You can request your tax return transcript online directly from the IRS rather than making a request by mail.  For a short time the IRS allowed individuals to obtain immediate transcripts of prior tax returns, by online download.  However, due to security measures the ability to download a copy of your tax transcript has been suspected.  It should take between 5 and 10 days to receive your tax transcript through the mail. Click here to learn how to obtain your tax transcript.   

     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)

If you are separated or divorced there may be tax implications related to your new relationship status.  At Hess Family Law we can work with your existing tax preparer, or we can refer you to and work together with a new tax preparer to assist with separate and divorce tax implications. 

Efile.com suggests these tips for you to consider when filing your annual taxes.

Filing Status:

Your marital status as of December 31^st of each year controls your filing status for that year.   If you were still married on December 31, 2014, and you do not have an Agreement that specifies how you will file, you have two options:  file a joint return or file married filing separately. If you were divorced during 2014, you cannot file a joint return.  If you do not have an Agreement that addresses who may file as Head of Household, you can file as Head of House of Household (and get the benefit of a bigger standard deduction and more advantageous tax brackets) if you had a dependent living with you for more than half the year and you paid for more than half of the upkeep for your home. Otherwise, you may need to file as a Single tax payer.  Hess Family Law recommends you consult an accountant to determine the best way for you to file your taxes.

Dependent Exemptions:

Who claims the kids?  If you have an Agreement or Court order stating who claims the kids then the matter is resolved.  If you do not have such a document and you are the custodial parent you may claim your children as dependents for tax purposes.  The IRS considers you a custodial parent if your child lived with you for a longer period of time during the year than with your former spouse.  Regardless of your custodial arrangement, you and your ex-spouse can agree who claims the children as dependents.   In this instance the custodial parent must sign a waiver stating that he/she will not claim the deduction.