Wednesday, December 12, 2012

Watch Out for the Side Effects!

I just read about a new App for a smartphone this morning.  This App was developed in California to help people figure out how to divide up their property as they go through a divorce.  It's really intended to replace an attorney's role in the process.

As admirable as that may seem, there is a great potential for creating major problems in some cases.

Full disclosure:  I am a divorce attorney and I am paid to help people undo their marriages.  But, the people who are wanting to do their own divorces don't want to hire me or any other attorney, so their decision has no real effect on me.  I'm not losing any business because they wouldn't have hired me anyway.  I do think people in short-term marriages, with no kids and little or no property, can probably do their own divorces, if they are so inclined.

This post is not to save business for me.   I am writing this so that people with children or some significant assets or debts can make better decisions on the best course of action for themselves.

Here are some possible side effects for an untrained person using some tools and trying to work out their own divorce.

1.  Tax consequences.  No one likes surprises from the IRS.  Unfortunately, tax issues are lurking everywhere in divorces.  Paying the other spouse some money may be alimony or it could be property division.  There can be taxes owed if it's not done right.  Different retirement assets have different tax consequences which can also affect the net value of those assets.  Real estate sales may trigger capital gains taxes, now or in the future, and that may affect the net value of the land. The parties need to consider their tax basis in various investments when they are doing a property division.  Tax consequences probably won't be much of an issue if someone doesn't have any of these assets.

2.  Enforceability.  In divorces, it's not uncommon for disputes to break out post-divorce about whether agreements are being followed.  The terms of the divorce decree must be clearly spelled out with proper language in order for them to be enforced.  In many cases, there needs to be some collateral or something available as a back-up. Again, if there are no significant assets, this is probably not an issue, although people will fight over anything, as you probably already know.

3.  Extra paperwork.  Many people assume a judge will simply divide everything in half.  That's one way to divide things, but it rarely happens in court.  People can decide to agree on their own to do that, but it may cause a lot of extra paperwork to complete the divisions.  There are often simpler ways to do the property division, which can be handled by an experienced attorney, but which a private party may know nothing about.  Extra paperwork means more opportunities to mess things up.

4.  Remaining connected.  As badly as one or both parties may want to be divorced and separate and independent individuals, they may end up connected for a long time due to property or debt issues that are joint.  An experienced attorney may be able to help them come up with ways to be apart.  Doing things on their own, the parties may end up still connected.

5.  Incompleteness.  Maybe the most common problem for people doing their own divorces is the failure to take all the necessary steps.  Forms may be incomplete.  Language in the decree may be incomplete.  And sometimes there are some obvious  problems that are overlooked.  Once again, with no kids and with little or no property, there may not be a problem.  Otherwise, count on problems.

These are not all the problems that can occur when people decide to do their divorce without an attorney.  In very simple cases that may be fine.  In all others, it is risky.  In addition, it is common for one party to take advantage of their spouse when the party has greater knowledge, experience and control.  Divorce is such an important event, it shouldn't be done without a lot of thought and help.

Footnote:  Each state has different divorce laws which can affect the outcome of the case.  Using California, New York or even Oklahoma law for a Texas divorce is virtually guaranteed to be a disaster.


Unknown said...

Congrats for your business, we too deal with Utah Divorce, i will share your post wit my friends in texas

Unknown said...
This comment has been removed by the author.
Rogoff said...

Seriously it was nice to read all those five side effects. Everyone should know these points. Thanks for sharing this informative information. Great blog post.
Chicago Divorce Lawyer