Divorced spouses also may be eligible to collect Social Security retirement benefits based on their ex-spouse’s work record. The divorced spouse is generally eligible to collect benefits if the divorced spouse:
- is sixty-two or older,
- is unmarried,
- was married to the worker for at least ten years, and
- is not entitled to benefits, on own or other account, that exceed one-half the worker’s primary benefit amount.
The wage earning spouse doesn’t have to be retired and actually drawing benefits; he or she iust has to be eligible for retirement benefits.
The impact of divorce on Social Security retirement benefits is very different From its impact on pension benefits. A worker with a pension is eligible for a certain amount of money in benefits. If a court orders these benefits split between the parties, the worker’s share will go down.
As a majority of states have caught “lottery fever,” there are a growing number of news stories and court opinions about how lottery winnings are to be divided in the event of a divorce. Sometimes the issue arises when one spouse won a big lottery after the couple has separated but before a divorce is final. The spouse who bought the lottery ticket wants to keep all the winnings for himself or herself, while the other spouse wants a piece of the action.
The rule in most states is that if the winnings came from a lottery ticket purchased during the marriage-even if the parties were separated-the winnings are marital or community property, which means the winnings can be divided between the husband and wife.
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The obligation of a divorced parent to pay for the child’s college expenses or trade school will depend on the state in which the parents live and any agreement between the parents regarding such expenses.
Courts in some states will require parents to pay for a child’s college expenses, assuming the parents can afford it and the child is a good enough student to benefit from college. Courts in these states reason that the child’s parents probably would have helped pay for the child’s education had the marriage remained intact and that the child’s education should not suffer because of the divorce.
In an Illinois case, for example, the father during the marriage was very enthusiastic about having his son attend his alma mater, Dartmouth College. The father took his son to Dartmouth three times and often bought his son clothes and memorabilia with the Dartmouth logo. The father even arranged for influential alumni of Dartmouth to write letters of recommendation for his son.
A question often arises on the effect of joint custody on child support. The effect of joint custody will depend on the nature of the joint custody arrangement. If the parents have joint legal custody (by which they share making major decisions regarding the child), that by itself will have little effect on child support. If the parents have only joint legal custody, one parent still has primary custody of the child and handles payment of most of the child’s day-to-day expenses. The custodial parent’s expenses for the child have not been reduced by the joint custody arrangement.
If the parents have joint physical custody, with the child spending a substantial amount of time with each parent, and if the parents have approximately equal incomes, it is possible neither parent will have to pay support to the other. The father and mother will pay the child’s day-to-day expenses when the child is in their respective homes. The parents, however, will need to coordinate payments on major expenses such as camp, school, clothing, and insurance.
Even in contested cases that have to be decided by a judge, most parties manage to decide between themselves how to divide the relatively small items of personal property. Nonetheless, the phrase “they battled down to who got the last teaspoon” reflects the intensity of emotion that can come with divorce.
Even couples who are relatively amicable when splitting up usually manage to find a few pieces of property to fight over. The individual piece of property often is not truly important by itself, but it comes to represent the frustrations of a relationship that has failed. Perhaps it is easier to obtain an emotional release from fighting over some object than focusing on the underlying personal characteristics that caused the marriage to end.
If the parties truly cannot resolve a dispute over personal property, a judge can do it for them, but that normally is not a cost effective way to resolve the issue. If the judge does have to resolve the dispute, the judge will consider the same factors discussed earlier in the section on dividing marital or community property. In addition, the judge may consider who acquired the property, who uses the property, and whether the property has a special connection to the original family of one spouse.
When a couple divorces, they probably focus first on dividing up the property that’s easy to see-the home, furniture, cars, and so on. The property they can’t see-their intangible property-is also affected by divorce. Pensions are one kind of intangible property. For many families, a pension is the largest asset, after the family home. Even if the pension is earned solely by the efforts of one spouse, the portion of it that was earned during the marriage is still marital property subject to division by the court.
Many courts prefer to give full rights to a pension to the party who earned it as long as the other party will have a sufficient amount of income and property from other sources.
If, however, the pension is the primary source of income that a spouse would have and there are no other significant sources of income, the court is likely to divide rights to the pension. The court can divide the pension between the spouses by percentages (e.g., one spouse will receive 60 percent, the other spouse, 40 percent) or by a fixed cash amount to one spouse with the remainder to the other spouse (e.g., one spouse will get $600 per month, the other spouse, $400).
The situation is more complicated if both wife and husband have been actively involved in the business. The court may set up an arrangement by which one spouse has the right to buy out the other spouse over time. Alternatively, the right to buy out the other could be sequential-first given to one spouse for a certain period of time, then to the other spouse for the same period of time. As with handling division of the family home, a forced sale might be an option if neither party can buy out the other party (although most courts would favor giving the business to just one spouse rather than dissolving an ongoing business).
If the court thinks the parties can continue to work together despite the divorce, the court may continue the status quo with the husband and wife remaining as business partners, even though they are no longer marital partners.
Valuation of family businesses can be tricky. A closely held business does not have a value that can be readily ascertained on a stock exchange. If the business is of sufficient size, it could be worth the parties’ efforts to hire experts such as accountants to evaluate the business, assuming the value of the business is disputed or uncertain. On the other hand, if the business is very small or clearly does not have a significant positive value, it probably will not be worth the time and money to thoroughly evaluate the business.
The laws of dividing property vary from state to state. As a starting point, however, most states allow parties to keep their own separate or non-marital property. Non-marital property includes property that a spouse brought into the marriage and kept separate during the marriage. It also includes inheritances received during the marriage and kept separate during the marriage. In addition, non-marital or separate property may include gifts received by just one spouse during the marriage. A few states permit division of separate as well as marital property when parties divorce, but the origin of the property is considered when deciding who receives the property.
The right of a spouse to keep his or her separate or non-marital property may depend on the degree to which the property was, in fact, kept separate. For example, if a wife came into a marriage with a $20,000 money market account and wanted to keep it as non-marital property, she should keep the account in her own name and not deposit any funds earned during the marriage into the account. She should not, for instance, deposit her paychecks directly into the money market account, because the paychecks are marital funds and could turn the whole account into marital property. The process of changing non-marital property into marital property and vice versa sometimes is called transmutation.
In the event of a divorce, the husband and wife generally are free to divide their property as they see fit. They may enter into what is called a marital settlement agreement. A marital settlement agreement is a contract between the husband and wife that divides property and debts and resolves other issues of the divorce. Although many divorces begin with a high level of acrimony, a substantial majority of divorces (95 percent or more) are settled by the husband and wife-often with help from attorneys-without need for a judge deciding property issues or other issues.
When the husband and wife have reached a marital settlement agreement, they can take the agreement to court, where a judge usually will approve the agreement after a short hearing. Some states with simplified divorce procedures might not even require a hearing if everything has been agreed to by the husband and wife.
A woman who divorces may resume her unmarried name or keep her married name as she wishes. She can even change her name to something completely new, as long as she is not doing so for fraudulent purposes. Court proceedings generally are not necessary in order to change a name.
If a woman is changing her name, she should notify government agencies and private companies that have records of her name. Examples of places to notify: the Internal Revenue Service, Social Security Administration, Passport Agency (within U.S. State Department), Post Office, state tax agencies, driver’s license bureau, voter registration bureau, professional licensing agencies, professional societies, unions, mortgage companies, landlord, banks, charge card companies, telephone companies, other utilities, magazines and newspapers to which she subscribes, doctors and dentists, and schools and colleges that she attended or that her children attend.