Are there advantages to filing a divorce or custody action first?

There certainly can be advantages to filing your divorce or custody action first.  There can also be tactical advantages to waiting until your spouse or partner files. Discuss with your attorney whether there are any advantages to you filing first. Your attorney may advise you to file first or to wait until your spouse files, depending upon the overall strategy for your case and your specific circumstances.  Each client’s case is very unique.

Some Examples…

Since this is a frequently asked question, some examples are in order.  For example, hypothetically assume that your spouse is an orthodontist. He or she has moved out of the house and is transferring $10,000.00 per month to you voluntarily. Your attorney may advise you that if this matter went to court, you would get less money. It would then be advantageous to wait to file and let your spouse set a favorable precedent for you. The court may likely follow this favorable precedent if it has been in place long enough. [Read more…]

Three Ways to Financially Protect Yourself During a Divorce

There are three ways to protect yourself financially during a divorce. The first is ensuring that child support is paid.  The second is requesting spousal maintenance if appropriate.  The third is conducting proper discovery to ensure that all assets are known and are fairly divided.

Child Support

Whether you will be receiving, or paying, child support is often the subject of much worry.  How will you make ends meet?  The mechanisms for both payment and receipt of child support are rather simple, and help is available for collecting support if it is not paid both from the courts and the Division of Child Support (DCS).  The custodial parent receives child support. The non-custodial parent will not receive child support regardless of his or her financial circumstances.  Child support may also be available when there is a joint custody and one parent earns less than the other.

A judge has the authority to enter a temporary order for custody and child support. This order ordinarily remains in place until a final decree establishing custody is entered. In most cases, a hearing for temporary custody and support can be held shortly after the filing of the petition for dissolution.  All that is required is a motion for temporary support with supporting documents.  The amount that you receive will be based on the Washington State Child Support Guidelines and are based on the incomes of both parents. [Read more…]

Pregnancy and Divorce

A Washington State divorce case made headlines in 2005 when a Spokane judge refused to grant a pregnant woman a divorce despite not having a relationship with her abusive husband for a number of years. This case, and the high-profile media coverage it got, changed a lot of minds about the relationship between pregnancy and divorce. It also played a key role in changing the state’s laws.

If you need to file for divorce but are pregnant — or if your spouse is pregnant with someone else’s child — Washington State has laws in place to ensure you can end your marriage before the baby is born. These cases are complex, however, and you need a knowledgeable and skilled attorney on your side. Call David J. Crouse & Associates, PLLC today at 509-624-1380 to reach the legal team you want on your side. [Read more…]

Does having another child lower child support?

This has very recently become a hotly contested issue in the Spokane County Superior Court.  The formal name for a requested reduction in support for another child is a “deviation for a child by another relationship”.    Typically, an individual who is being asked to pay child support has a child by a prior relationship.  In some cases, the individual completes a divorce or parenting plan action and then subsequently has another child by a subsequent relationship and wants to modify child support.   In past years, the Spokane County Judges typically granted the individual with the additional children  a lowered child support amount (deviation).  This was a fairly typical and common result. [Read more…]

How Long Does Alimony Last?

Spousal maintenance, also known as alimony, is available to Washington courts in divorce and legal separation cases in order to make a fair and equitable distribution of the marital estate.  There are two primary factors that courts use in determining how much maintenance (if any) to award and for how long. These two primary factors are the length of the marriage and “need and ability to pay”.

[Read more…]

Can I Fix My Divorce Decree?

Sometimes errors are made in a divorce decree.   A common error is that some property has not been divided, for example a stock account was overlooked. Perhaps a business was valued incorrectly, and it turns out to be worth far more (or less) than the original estimate of value.  In some cases, assets or accounts have been hidden, and only discovered after entry of the divorce decree. Perhaps false or misleading values were provided in discovery.   When these things occur, can they be fixed after the divorce is entered? [Read more…]

Divorce in Washington Published

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In June 2014, Addicus Publishing released the book “Divorce in Washington”, which was authored exclusively by David Crouse.  Divorce in Washington is now available at the Amazon, Barnes and Noble, and Apple store websites. It is also available on Kindle, Nook, and I-Books, and at the Addicus Publishing website.  A courtesy book is always available to all firm clients.

Hidden Business Assets in Divorce Cases

In addition to the assets commonly hidden in the typical divorce case, business owners (particularly where closely held businesses are involved) may try to hide assets as follows. Closely held businesses most at risk are those businesses operated by just the spouse, or by the spouse and their family/friends. More often than not, one or more of the following is usually present in closely held businesses:

• Skimming cash from the business. This is especially prevalent in restaurant operations, espresso operations, construction/home maintenance fields, or wherever cash transactions are prevalent. Even where checks are involved, these checks are deposited into a separate account rather than into the business account.
• Salary payments to a nonexistent employee, with checks that will be voided after the divorce. A variation on this ruse is a salary payment to a actual person (known in legal circles as a “straw man”) to decrease profitability for purposes of child support, maintenance, or business valuation, with the payment recouped in some fashion after the divorce is final. Typically, this person gives the money back after the divorce has been long-completed or passes some other benefit (such as season Zag tickets in a recent case) to the business owner.
• Money paid from the business to a trusted third party such as the spouse’s father, mother, girlfriend, boyfriend or close associate. The money is either given back to the spouse after the divorce is final or diverted for the use of this relative (to the detriment of the marital community).
• A delay in signing long-term business contracts until after the divorce in order to lower the value of the business during the valuation process and also to present the business as being in financial straits for the purpose of reducing spousal maintenance or child support.
• Checks or other funds received near the end of the year which are then held until the following year to reduce business value or to avoid sharing with a spouse. The hiding spouse knows that the following year’s tax return will not likely be prepared until after the divorce is final. Similarly, where separation is anticipated, checks or other funds are held for deposit until after the separation to create the appearance of separate property.
• Purchase of non-essential capital assets in order to reduce income. This is a fairly common ruse in medical and dental practices. It is also prevalent in other businesses where substantial equipment exists.

The likelihood of discovering these various ruses increases dramatically where the attorney has extensive experience in business valuation cases. Use of a CPA with substantial experience in business valuation and accounting is also imperative.

Hidden Assets in Divorce Cases

Hiding marital assets during the process of a divorce is contrary to the fiduciary duty that each spouse owes to the other. Some spouses view the potential financial gain from hiding assets as being far more important than fair dealing. Hidden assets are often not easily found, especially those placed in the hands of third parties or behind trust or corporate documents.

Looking for hidden assets or unreported/under-reported income often involved the careful review of hundreds of pages of financial documents and the discovery process can test the resolve of even the most dedicated litigators. Proving the existence of an asset and proving it is part of the divisible marital estate is indeed a challenge. The individual hiding assets has a distinct advantage over the attorney who tries to discover them. This attorney seeking to find hidden assets must use a variety of discovery methods to increase the odds of locating the missing asset or income.

The following list reflects areas that have the potential for the hiding of assets or income:

• Bank or investment accounts. The existence of hidden bank or investment accounts is probably the most prevalent form of hidden assets.
• Hidden income unreported on tax returns and financial statements.
• Collusion with an employer to delay bonuses, stock options, or raises until a time when the asset or income would be considered separate property. While always possible, this is even more prevalent where the employer is a closely held business.
• Debt repayment to a friend for a phony debt.
• Expenses paid for a girlfriend or boyfriend, such as gifts, travel, rent, or tuition for college or classes.
• Stocks, mutual funds or other securities
• Stock Options – Stock options, not yet exercised but given as part of a compensation package to an employee, are often undisclosed unless the right questions are asked.
• Farming assets – “Watch the hay disappear.” Farm assets are a good candidate for aerial scouting.
• Commissions not yet paid/contingency fees not yet paid. This often occurs hand in hand with collusion between the spouse and their employer.
• Tax credits, carryovers and refunds – The parties may be entitled to credit previous tax losses against income and to carry this credit forward annually in increments. Similarly, tax refunds require a determination of whose name is the check coming to or what account it will be directly deposited into.
• A custodial account set up in the name of a child, using the child’s Social Security number. Deposits and withdrawals can easily be made without an unsuspecting spouse knowing.
• Hobby collections (particularly baseball cards, coins and stamps) as well as gold and silver – These should be itemized before dissolution if possible and appraised as soon as possible. This is one of the quickest assets to disappear and unless immediately accounted for, will never be fully discovered.
• Antiques and artwork – Antiques, paintings, sculptures, and carpets are often located at the spouse’s place of business.
• Frequent Flyer miles- A potentially valuable asset which is frequently overlooked but readily discoverable.
• Vehicles, boats, ATV’s, tools, firearms and other household goods. Like hobby collections, these assets can quickly disappear after separation and should be quickly documented and/or appraised.

By no means is this list of potential problem areas exhaustive. A properly motivated spouse can hide a myriad of assets. Instead, this list represents hidden assets commonly seen in dissolution actions where a spouse is inclined to deception. Having identified common areas of abuse, the inquiry then turns to how these hidden assets can be discovered. This is a multi-faceted approach involving the analysis of tax returns, use of interrogatories (written questions under oath) or other discovery methods, and the analysis of other documents and records.

In almost every case, my first point of inquiry involves the inspection and analysis of income tax returns, both personal and corporate. These returns provide clues to the discovery of income, income earning assets, or asset sales. Typically, the attached schedules are far more important than the summary entries on the first two pages of the 1040 return. It is my practice to get copies of tax returns for at least the prior three to five years, and in some cases I have gone back much farther. Spouses inclined to deception may provide altered or incomplete tax returns when requested through discovery. Where deception is suspected, it is wise to order a copy of the returns directly from the IRS or the state.

I am not a CPA and few practicing family law attorneys are so qualified. Accordingly, first and foremost, I view my job as a family law attorney to identify the potential for abuse. When red flags arise, it is my practice to bring in an accountant to analyze the respective financial documents. While my discovery may reveal hidden assets, trained financial professionals are far more likely to recognize areas of deception and assist in the process of asset recovery and valuation for the divorce court.

David J. Crouse & Associates