On behalf of Morna Challoner of Challoner Law posted in blog on Monday, October 2, 2017. Going through divorce will cause you to face many concerns. Some of the biggest apprehensions may relate to how property division will turn out and other possible financial impacts. As a business owner, you may feel particular anxiety when it comes to the potential of losing a portion of your company to your ex-spouse as part of the divorce settlement. Dividing business assets can often present challenges. In particular, valuing a business may not always go as straightforwardly as hoped, as many different factors could have an important role to play. You may want to better understand how active and passive appreciation could impact valuation. Active appreciation With active appreciation, your direct actions contribute to your company's value increasing. These actions could range from bettering the company through various growth efforts to creating and enacting business strategies that make your business a top competitor. In relation to divorce, value attributed to active appreciation during the time of your marriage will likely go through property division proceedings. Because of this factor, determining which portion of your company's value came from active appreciation and which came from passive appreciation may seem vital. Passive appreciation As the name suggests, passive appreciation involves an increase in business value with no effort from you. This type of appreciation often gets attributed to economic growth, industry growth, interest rate changes or demographic trends. The portion of business value associated with passive appreciation does not get divided during divorce proceedings. Determining active vs passive appreciation During the business valuation process, determining what value comes from active appreciation versus passive appreciation has its difficulties. Often, a professional evaluator's insight plays a role during this process. However, even a professional may have a challenging time [...]
On behalf of Morna Challoner of Challoner Law posted in blog on Tuesday, December 5, 2017. Financially conscious couples tend to start saving for retirement early on in their marriages. Individual retirement accounts -- IRAs -- are popular choices when saving for the future, and they provide many benefits to future retirees. Divorce can complicate these savings though. Most California couples understand that they must divide retirement funds, but many are unsure of how to do so. Failing to consider the implications of improper withdrawals could result in both parties shelling out hefty penalties and/or taxes. Why can't we just withdraw the money and split it up? Savings and checking accounts can be emptied and split much easier than retirement accounts when necessary. You might feel tempted to do the same with your IRA to speed up the asset division process. Unlike IRAs, 401(k)s and other retirement savings, regular banking accounts rarely have associated penalties for withdrawing money. IRAs, on the other hand, have early withdrawal penalties that tend to be steep, as these intend to discourage people from dipping into their retirement savings. In almost every situation, early withdrawal leads to these penalties. Is there a way to receive payments from an IRA without facing penalties? Qualified domestic relation orders allow you to withdraw from your IRA without the typical associated penalties. Divorcing couples create QDROs during asset division, and may then make pursuant withdrawals and payments. On top of having a QDRO in place, you must pay any withdrawals directly to the intended individual. Paying off a debt on behalf of the other person will usually not qualify for penalty exemptions. This means if you purchase something, pay off a creditor or use the funds for anything other than a direct payment, you will pay penalties and any resulting taxes. [...]
On behalf of Morna Challoner of Challoner Law posted in High Asset Divorce on Friday, June 16, 2017. Celebrity prenuptial agreements tend to make news because of the different (and odd) provisions that couples hold each other to. It is not surprising to find clauses requiring a spouse to remain at a certain weight, or prohibiting in-laws and friends from staying in the home for more than a week at a time. As prenuptial agreements evolve, more are including what referred to as "lifestyle" clauses. A common example of such a clause is an "infidelity" section. Essentially, a cheating spouse may be subject to a financial penalty if he or she strays from the marriage. One example is the cheating clause rumored to be in the prenuptial agreement established between Justin Timberlake and Jessica Biel. According to Forbes magazine, Timberlake would have to shell out $500,000 if he cheats. Like many clauses in celebrity prenuptial agreements, the infidelity clause may make its way into prenup for everyday people. Indeed, no one wants to face the prospect of being cheated on, and an infidelity clause can help soon-to-be married couples talk openly about what would happen if the relationship gets complicated. While it may sound good while negotiating the agreement, it is important to understand whether such a clause is actually enforceable. Of course, there is no clear cut answer, but courts generally look to a number of factors to ascertain whether the couple actually intended to include an infidelity clause and hold each other accountable. They include, but are not limited to, whether each party had legal counsel while negotiating the agreement, and whether either party signed it under duress. If you have additional questions regarding prenuptial agreements, an experienced family law attorney can advise you.
On behalf of Morna Challoner of Challoner Law posted in High Asset Divorce on Thursday, July 6, 2017. If you and your spouse have made the decision to divorce, no doubt that you have many questions about the process. For many people in Santa Rosa, their biggest concerns lie with how the child custody process and the asset division process will be handled. Every situation is different based on the best interests of the child and the financial aspects of the divorcing couple, among other factors. When a family has multiple assets, including a vacation home, you might be wondering how to procure that asset for yourself in a divorce. If a vacation home is marital property (and it often is) it will be considered an asset that qualifies for division between the two spouses. If the vacation home is a priority for a person in a divorce, and it falls under the category of marital property, one may have to sequester or give up another asset in lieu of the vacation home. However, one should be aware of the tax obligations that may accompany a vacation home. Since virtually all real estate is taxed under California state law, one may need to consider the financial obligations of the property both now and in the future. At Challoner Law, we understand that you may have assets that are very important to you and we do our best to procure those assets for our clients. The tax obligations could help offset the immediate cost of taking sole ownership of the family's vacation home. There are many ways that an asset division can be handled during a divorce. It is important to get a full and complete understanding of all assets and liabilities that can affect the asset division process. This will be the basis [...]
On behalf of Morna Challoner of Challoner Law posted in High Asset Divorce on Thursday, August 10, 2017. Money is a have it or have not situation. For those who have it, it is a great blessing but also a big responsibility. For married couples who have decided to go their separate ways, financial aspects will begin to creep into the minds of those who are looking to separate. So, which assets belongs to whom in a Santa Rose high asset divorce? Financial assets could be any tangible asset like property and savings accounts. Many people have questions about their 401(k)s, many of which have been accumulating assets for years of a couple's marriage. Oftentimes, it is accumulated by the income of one spouse, so the non-earning spouse may have concerns about accessing those funds. Unless previously determined (like in a prenuptial agreement), 401(k)s are typically considered marital property and, thus, subject to equal division between divorcing spouses. However, transferring these assets successfully and with minimal fees is key to getting the most out of your financial assets and investments. When filing for divorce, there are often special considerations or filings that need to be done in order to avoid extra and unnecessary taxation and fees. This could apply to transferring financial accounts like 401(k)s and stocks in case of a divorce. The process can be enough to deal with, so any unnecessary costs or hassles should be avoided during the asset division process, if possible. Special considerations could also apply to the family home if divorcing spouses decide to sell the property and divide up the profits. If not approached correctly, there could be unnecessary costs associated with this process. Divorcing spouses are usually allotted specific tax breaks or discounted fees associated with asset division or transfer. Other parties not going through [...]