The division of assets and debts is one of the most difficult issues that must be addressed in a divorce particularly if the spouses do not have children. Community property law can be deceptively complex because there are many potential traps that can cause a proposed property settlement to unravel or a negotiated marital settlement agreement to become profoundly unfair in unanticipated ways. The Best New Mexico Divorce Lawyers will have the ability to anticipate these potential pitfalls and structure a property settlement that navigates around these types of failings. We have highlighted a few common potential legal pitfalls that can interfere with the division of property and debts in a marital dissolution.
Failing to Uncover Hidden Assets:
Despite the obligation to provide full disclosure regarding all property in a divorce, it become easier to hide or understate the value of assets if the parties have a greater variety of complex and sophisticated assets. When a spouse owns a small business, this provides ample opportunity to deceive a spouse by not disclosing unreported cash, undervaluing company assets or using other forms of creative bookkeeping. Whether the undisclosed asset is a small business or difficult to value stock options for a startup, complete disclosure of all assets is essential to ensure that the division of property and debts is appropriate.
Not Executing a Qualified Domestic Relations Order (QDRO):
While the marital settlement agreement (MSA) or divorce judgment will reference a division of retirement accounts, an additional step is essential to protect a spouse’s interest in the retirement account of a husband or wife. The QDRO must be drafted according to specific specifications of the plan administrator and federal law to be binding on the retirement plan. The QDRO will provide for the division of the principle and calculation of the appreciation associated with each parties’ community property portion of the contributions. The QDRO also will make the non-participant spouse an alternate payee so that the proceeds are paid directly to each spouse by the plan administrator. If the QDRO is not drafted and served on the plan administrator, the participant may receive all of the funds from the retirement.
Inadequate Planning for Contingencies:
While tangible assets can be distributed immediately, there are certain property issues that may be contingent on future events, such as the future sale of the family home or the requirement that one spouse pay a particular debt. It is not uncommon to agree to defer the sale of the family home so that the kids do not have to move. However, the property division can become distorted if one of the spouse’s later refuses to cooperate in facilitating the sale of the home. Similarly, if your spouse fails to pay an agreed upon debt, the creditor may seize your assets to satisfy the debt which again would lead in a fundamental distortion of the property settlement. The MSA should include provisions that anticipate and provide a remedy for these types of future contingent events.
The above information is designed solely to illustrate general principles of law, and does not constitute a specific legal opinion on individual cases. We suggest that you contact experienced legal counsel for a specific opinion tailored to your individual circumstances.
If you have questions about the division of assets and debts during the marital dissolution process, our experienced New Mexico Divorce Property Division Lawyers invite you to meet with us. Jay Goodman & Associates offers a free consultation in our centrally located offices in Santa Fe and Albuquerque so that we can discuss your situation and answer your questions. Call us today to schedule your free consultation at (505) 989-8117 to learn about your rights and options.