1. What about real estate?
Most married couples hold property, specifically real estate, in a manner known as tenancy by the entirety, which means that when one passes away, even if during a divorce process, the other automatically inherits the deceased ‘s portion of the property.
Tenancy in common, like tenancy by the entirety, provides for equal shares, however, if you die, your share will be passed to whomever you’ve designated in your will or estate planning document. However, under Arkansas law, if you die and there is no will or other estate planning document, your property held in a tenancy in common will pass partly to your spouse and partly to other heirs set out in the relevant laws.
To formally change the ownership status, you must execute a deed clearly stating this change. The document must be signed in the presence of a notary public and recorded in the offfice of the Recorder of deeds where the deed to your home was originally recorded.
2. What if I suspect that my husband is hiding property?
An agreement is also in valid should there be “fraud in the inducement,” that is, certain lies that influenced you to sign the agreement. If this “hiding property” constitutes fraud, your agreement is not valid. For example: your spouse told you that he or she did not have any property interest in the speedboat at his best friend’s lake house. It turns out, after you signed the separation agreement that he owns half the speedboat, and it is worth $20,000.
Deception is not a wise move when it comes to separation and/or divorce. The judge will most likely pick up on it and once it is evident, your credibility will be worth nothing in the eyes of the court.
3. What will happen to my credit rating or ability to get a loan?
Although a particular marriage may be coming to an end as a result of divorce, unfortunately, the same cannot be said for any and all debts and/or credit obligations accumulated during that marriage. While there are many uncertainties connected with the entire divorce process, one element can be counted on to remain constant — the monthly bills. Therefore, from the moment the decision to separate is made, it is very important to understand the effects this will have on your debts and credit rating.
A person’s credit history is very important as it is a major means by which a particular creditor can judge whether or not you are a good risk for a loan or credit line. Your history reflects what you have done with previous loans/credit lines and your willingness to repay borrowed monies. This factor and your current income are what determine what is known as your “credit worthiness”. It is your credit worthiness that will ultimately decide whether or not you will be granted the loan or line of credit you apply for.
In some cases, it might be advisable to keep or open a joint line of credit to pay for such things as child expenses or property maintenance during the separation. In this instance, though, it is strongly suggested that it is put in writing exactly what the account is to be used for and what amount each spouse is expected to contribute to that account. It is even possible to arrange things so that neither spouse can withdraw/spend any of the monies in that account without the other’s written consent (for example, a check that requires two signatures to be valid). For the most part, however, it is recommended that no new joint accounts be opened.
During the separation period, in anticipation of the final divorce, it is also a good idea to obtain a copy of your individual credit report. You may request your free credit report from each of the nationwide consumer credit reporting companies: Equifax, Experian and TransUnion, online at www.annualcreditreport.com.
Your individual credit report will be able to give you an accurate list of all of your current outstanding debts as well as previous credit history. Should you find that errors have been made, there are avenues available through which your credit standing can be corrected. This information will also be made available via the credit bureaus.
4. What is “marital property”?
Property acquired during the marriage except:
- Gifts, or income from such gifts
- Property acquired due to the death of another person, or income from such property
- Property acquired after a decree of divorce from bed and board
- Property excluded by valid agreement of the parties
- Workers’ Compensation, Social Security or personal injury claim benefits for permanent disability or future medical expenses
- Income from property owned before the marriage
- Income from gifts
5. My spouse and I purchased a car recently; now we are divorcing. What should we do about the car? Is it community property?
Not in Arkansas, which is not a community property state. However, that’s just one issue. Another issue is that you signed the loan papers. Therefore, if your spouse keeps the car but defaults on the loan, the lender will come after you. In settlement, if your spouse is keeping a jointly-owned vehicle, consider requesting that he or she agree to refinance the car in his or her name only. That will remove any possibility of financial responsibility for you.
6. If I received an inheritance before I got married, then it’s clearly mine, right?
You should place the inheritance into an account in your name only and keep the funds in that account separate from all marital funds. If you deposit any marital funds into that account, you could change the separate inheritance funds into marital funds. This includes marital funds that you might mistakenly believe to be separate funds, such as a paycheck.
For example: the husband has a money market account. He has bought and sold securities through this account for the past ten years. Recently he marries and after a few months, the checking account that he and his wife set up begins to accumulate quite a bit of money. The husband decides to deposit some of that money into his separate money market account, rather than opening a new one in both of their names. By doing this, he potentially makes all of the funds in the money market account marital, not just that which was saved and deposited during the marriage.
In addition, if you use any part of the inheritance to pay a marital debt or expense, that part may be considered marital property. If you replace the paid-out funds with other funds, the account may become marital property. The mere act of paying a marital expense with part of a separate fund may turn the entire separate property into marital.
Finally, remember that in Arkansas, a judge has the power to award one party all or part of the other party’s non-marital property.
7. My ex was supposed to take over the car payment and take my name off the loan, but the creditor is still coming after me. Can it do that?
Yes, it can. Generally, creditors aren’t subject to divorce court rulings because they’re usually not parties to the divorce cases.
A common misconception about debts in divorce cases is the “removing” of one or the other spouse’s name from a joint debt (like a car loan). It’s not within the power of the divorcing spouses or the divorce court to relieve either spouse of his or her individual responsibility to the creditor debts. Only the creditor can do that, and the creditor isn’t likely to do so simply because there has been a divorce.
Please feel free to call our office at (501) 296-9999 to schedule a free consultation about any legal issues you may wish to discuss.