Posts Tagged ‘Arizona’

TEMPE AND MESA ARIZONA DIVORCE AND FAMILY LAW LAWYER DISCUSSES BUSINESS VALUATIONS

Monday, July 30th, 2012

 

Arizona Divorces, Equitable Division of Assets and Debts, Including Complex Business Valuations:

Submitted by Attorney Douglas C. Gardner

Under Arizona law, the Court must equitably divide the assets and debts of the parties involved in a divorce case.  The general rule is that the equitable division will also be an equal division, though there are some exceptions where an un-equal division is considered equitable or fair by the Courts. 

Many assets and debts are simple enough to divide.  If there is $1,000.00 in a bank account, each party simply takes $500.00.  If one side already took $400.00, then of the remaining $600.00, one party will receive another $100.00, and the other party will get the $500.00. 

Similarly, with debts, each party is generally required to pay 50% of the debts.  Sometimes a house can be sold and the equity can be used first to pay down the debts.  Sometimes one party will do a balance transfer of 50% onto a different card, and each party will then be required to pay their 50% off at their own pace. 

Retirement accounts such as 401(K) accounts can be divided quite readily, though doing so may require a court order or complex paperwork.  The concept though is the same in that each party will get 50%. 

By settlement of the parties, and occasionally by court order, certain items are offset against other items.  The Court may give Husband the $500 pink sewing machine and give Wife the $500 orange chain saw, which would be an equitable division as each party has an item of equal value. 

Some care must be taken when using offsets or setoffs.  For example, $1000 in a savings account is not equal to $1000 in an IRA or 401(k).  The $1000.00 in the savings account has already had the taxes paid.  The $1000 in the IRA or 401(K) will require taxes of approximately 20% and a penalty in most cases of about 10%.  So the $1000 IRA or 401(K) nets only about $700.00 and the $1000.00 in the savings account nets the full $1000.  Similar issues result in property, real estate, stock, and businesses that have capital gains and other tax issues involved.  A qualified and experienced attorney should be able to help you understand the principles, and a CPA or accountant should be able to help you specifically quantify these valuation issues.

Having been involved in many complex divorces, an issue that often arises is the division of a business owned by one or both of the parties.  In cases where one party owned the business prior to the marriage, the other party may still have some claim to a part of the business.  In cases where the business was purchased or built during the marriage, the business must be equitably divided. 

Sometimes the easiest way is to sell the business and each party receives 50% of the net sales proceeds.  This makes things simpler for both parties, both attorneys, and the Judge.  However, in many cases the business is not one that is easily sold, or the business is the livelihood of one of the parties.  In these cases the business may be sold by the community to one of the individuals, or rather the purchasing party will pay the other party 50% of the value of the business. 

Figuring out the value of the business can be expensive and complex.  An appraisal for most houses costs $300-$400, and these can usually be obtained quite quickly.  The abundance of houses, all somewhat similar to one another (most have a kitchen, a family room, a few bedrooms and bathrooms) allow for comparable sales to be used to quickly identify the going rate for houses of a certain size and in a certain location.  With businesses, they are much less one size fits all.  Some businesses such as accounting or medical practices are service related.  Other businesses such as restaurants and grocery stores are retail, merchandise, or goods related.  Some businesses own the real estate used, while others rent or lease.  Some businesses are very risky and demand much higher returns.  Some businesses have intense competition, while other businesses have unique niches. 

Having been involved in many divorces including businesses, and having an accounting, finance and business background myself, I have seen how important it is to have businesses professionally evaluated.  Sometimes this can cost a few thousand dollars, but think for a moment what the cost to just guessing would be.  Hypothetically, the parties “guess” the business to be worth $300,000.00.  A business valuation would have cost $3,000.00.  Each party would have paid half of the business valuation.  If the “guess” is off by more than $3,000.00, one party will get burned.  What if the business was really worth $320,000.00 instead of $300,000.00?  The receiving party would receive $160,000 instead of $150,000.00 for half of the business.   This small difference in value would have easily justified the cost of the business valuation. 

There are some cases where the business is a very small business, or a new business with lots of debt, that is simply not worth much.  In these cases the business may not merit a full blown appraisal or valuation.  There are some options that can be considered to help both parties make appropriate decisions in such cases. 

Once the value of the business is determined, the parties need to ensure that certain adjustments are considered.  A business worth $500,000.00 may not automatically require a buyout of $250,000.00.  What if the business has debts of $400,000.00?  The net value of the business may then be only $100,000.00.  

A more complex adjustment is for anticipated capital gains tax.  If a business has been largely depreciated, upon the sale (other than a sale to a spouse as part of a divorce) the sale will trigger capital gains tax on the business.  This can be up to 20% of the purchase price (and subject to change as tax laws seem to do from time to time).  A business worth $500,000.00 could have a built in $100,000.00 of capital gains tax that would need to be considered and adjusted as appropriate.  This is more complex as there is uncertainty as to when the business would actually sell, and what the future capital gains tax would be. 

If you are involved in a divorce case involving simple or complex asset and debt issues and want experienced legal representation, please call 800-899-2730 and ask to speak with Douglas C. Gardner, or visit our website at yourarizonadivorcelawyer.com.

Calculating A “Ball-park” Child Support Amount.

Monday, July 9th, 2012

 

Submitted by Attorney Karl Scholes

 

I will often have my divorce, or post-decree, clients ask me, “How much child support will I be receiving/paying?” My normal answer to them is a resoundingly, lawyerly, “It depends.”

 

When they press me for a more specific response, I tell them, “Well, we just need to apply the Arizona Child Support Guidelines.” I then proceed to instruct them as to what the Guidelines specify.

 

However, when they push back even more, I tell them, “Oh, you are looking for a “ball-park” calculation. That I can get for you.”

 

The remainder of this article is an explanation on how to come to a “ball-park[1] ” child support calculation.

 

First, one should understand at least a little of the background about child support in Arizona. It is important to understand that Arizona law requires custodial and non-custodial parents to provide “reasonable support” for their minor children. A.R.S. §25-501(A). A parent’s child support obligation has priority over all other financial obligations of the parent. A.R.S. §25-501(C).

 

In addition, the court receives the authority to award child support under A.R.S. §25-320. This statute also makes it mandatory for the court to issue an order of child support as per the Arizona Child Support Guidelines, (unless the court finds that a deviation is necessary… which is a subject matter for another day.)

 

The Arizona Guidelines follow the Income Shares Model, which means that the total child support amount approximates the amount that would have been spent on the children if the parents and children were living together.  The guidelines involve numerous intricacies, and for a full application, one should consult an attorney – who is experienced in using the Arizona Child Support Guidelines – as to how the guidelines apply to each individual case.

 

Second, to get a “ball-park” child support calculation, one must be able to answer the following questions:

 

1.      What is the gross income of both parties? (Note, this issue sometimes becomes complicated, especially if one party is self-employed, has an income that is not easily ascertainable, or if one party is unemployed. Consult an attorney if there are any complications in your case.)

2.      What is the number and ages of minor children involved? (Note, if this factor is complicated, please consult a mental health professional before seeking the advise of an attorney.)

3.      What is the cost of medical/dental/vision insurance for the minor child(ren): The key to this factor is to find the cost for medical insurance for just the minor children. (Note, at times, this factor can be complicated as well. Please consult an attorney if there are any complications in your case.)

4.      What are the monthly childcare costs for the minor children?

5.      Are there any extra education expenses paid for the minor children?

6.      Are there any extraordinary (gifted or handicapped) expenses for the minor children?

7.      How many days, out of a year, will the non-custodial parent have with the minor children?

 

Third, the next step is to plug the numbers from the answers above into their corresponding areas in the Arizona child support calculator, which can be found here:

 

Fourth, once you have plugged in the numbers above into the calculator, it will dispense a number under the heading “Child Support Obligation to be paid by____________”. This is where you will have your “ball-park” child support number.

 

If there are complications in your child support case, or to get an exact child support calculation, contact a family law attorney who is experienced in using the Arizona Child Support Guidelines.

 

If you are in need of legal counsel and would like to speak with an experienced attorney, please call 800 899-2730  or visit our website at yourarizonadivorcelawyer.com. or www.davismiles.com


[1] While a “ball-park” calculation of child support may be important for purposes of settlement, or setting expectations, one should note that a full child support calculation should be done by an attorney who is experienced in using the Arizona Child Support Guidelines.  

 

 

ARIZONA DIVORCE LAWYER: COMMUNICATION ISSUES DURING AND AFTER DIVORCES (FOR THE CHILDREN’S SAKE)

Monday, June 18th, 2012

Submitted by Attorney Douglas Gardner

Tempe Arizona Divorce Attorney Speaks About Communicating With Spouse or Ex-Spouse About The Children

 

Most expensive Arizona divorces become expensive because of poor communication about the children.  Other factors can occasionally cause cases to get expensive, but generally custody issues have a large impact upon the cost of a case.

   

Except in extreme cases, the Court will generally order that the parties share joint legal custody.  Joint legal custody requires that both parents work together to make major medical, educational, and religious decisions.  In both sole custody and joint custody cases, the parties will still be required to have some level of communications regarding the logistics, including exchange times, exchange locations, and holiday scheduling.

 

In many cases, the parties will quickly (or at least eventually) learn to get along in a business-like relationship.  While the emotion and romance are long since gone, the parties should learn to work together at the business of raising their children.  Even in a business-like relationship, in which both parties are seeking to receive a personal advantage, parties can learn that it is mutually advantageous to compromise and to acquiesce to the other parent’s requests, so that at other times the other parent will compromise and acquiesce to future requests needed. 

 

It is important in developing a business-like relationship that the compromise work both ways, and the acquiescence work both ways.  If one parent is constantly a taker, and the other parent constantly acquiescing, this will cause resentment and will eventually result in a breakdown of communications and an unwillingness of one or both parents to compromise. 

 

A good divorce attorney should be able to discuss with you and share with you ways to work on communications, ways to set appropriate boundaries so that you are not taken advantage of, and other methods for “training” your ex-spouse or your soon-to-be-ex-spouse to understand that compromise works both ways. 

 

It is also of vital importance to have a detailed and strongly worded parenting plan in place.  While it is beneficial to both parents to work together and cooperate, and while it would be wonderful if both parents got along so well that the parenting plan was never needed, the fact is the parents are divorced or divorcing, and this indicates that there is a good chance that at least occasionally communications break down.  A solidly written parenting plan or custody order provides a fall back position for times when compromise is not occurring.  The parenting plan should detail the rights and responsibilities as well as the parenting times.  The parenting plan serves as the tie-breaking vote for occasions when no agreement can be reached.  The parent wishing to follow the written parenting plan prevails at that time. 

 

If you are experiencing legal issues involving custody or other difficult issues, whether as part of a divorce, after the divorce has already been entered, or a custody battle in which the parents were never married, you should have experienced legal counsel on your side. Please call 800 899-2730 and ask to speak with attorney Douglas C. Gardner, or visit our website at yourarizonadivorcelawyer.com.

Strategic Reasons for Being Nice-Custody Determination

Friday, June 8th, 2012

 

Submitted by Attorney Kirk Smith

 

In many cases, parents divorcing, or parents who were not married but are now separating, will fight a merciless custody battle for their children. The extreme acrimony attendant with such battles, in my experience, can have a very real impact on the children of these divorces. Increased cooperation between the parents lessens this emotional impact, and by itself, should be sufficient incentive for most parents to “play nice” during the subsequent legal process.  

 

None the less is there a strategic reason for one parent to be gracious to the other, outside altruism, that benefits them in the court’s final custody determination?  

 

In most cases one parent will become the primary physical custodian of the children, meaning that that parent will have the children at their residence the majority of the time each week. There are specific statutory factors the family law court examines when determining who becomes the primary physical custodian of the children. See Generally A.R.S. §25-403. 

 

One of the factors the court looks at in determining who should receive primary physical custodianship is;

 

Which parent is more likely to allow the child frequent and meaningful continuing contact with the other parent. This paragraph does not apply if the court determines that a parent is acting in good faith to protect the child from witnessing an act of domestic violence or being a victim of domestic violence or child abuse.A.R.S. § 25-403 (6)

Of course in some cases the other parent is a real danger to the children therefore it is necessary to diminish that other parent’s time with the children or ask that it be supervised. More often then not, however, both parents are usually suitable to care for the children, and an attempt to completely eliminate the other parent’s time with the children will be seen by the court negatively. The parent trying to “thwart” the other parent’s visitation with the children then could seriously and detrimentally effect that parent’s  chance of becoming the primary physical custodian because that parent did not “allow the child frequent and meaningful continuing contact with the other parent.”

If you are in need of legal counsel and would like to speak with an experienced attorney, please call 800 899-2730  or visit our website at yourarizonadivorcelawyer.com. or www.davismiles.com

A rule of thumb, assuming that the other parent is not a danger to the children, is to allow and encourage the other parent’s time with the children. This does not mean that you must have a half time schedule with the other parent, nor does it mean that anytime the other parent asks for time it must be provided. What it does mean is that going to extremes by trying to eliminate the other parent’s access to the children without good cause, strategically speaking, can backfire and decrease your chances of gaining the final custody determination from the court you wish.

 
 
 
 
 
 

 

 

 

 

 

 

ARIZONA DIVORCE: WHAT YOU SHOULD DO IF A DIVORCE IS COMING

Friday, May 18th, 2012

Tempe Arizona Divorce Lawyer Discusses Steps That Should Be Taken To Protect Yourself If A Divorce or Legal Separation Is Coming

 

 

Under Arizona law, as soon as the divorce case is filed and served upon the other person, and both parties are aware of the existence of the case, the Preliminary Injunction provides each party with certain protections such as preventing the other party from absconding with the children or assets. 

 

However, even before a case is filed, there are certain steps that should be taken to protect one’s self and to ensure that information remains available and obtainable.

 

As soon as you believe you will be going through a divorce, make sure you change your passwords to your computer, email accounts, blogs, cell phones, etc.  While some of the information on your electronic devices may need to be disclosed and provided, you will need to ensure that you have sole access to these lines of communication.  You want to ensure that if your attorney sends you attorney/client privileged communications by e-mail that only you will have access to these communications.

 

You should also ensure that you have safely written down the account numbers, account balances, and the name and address of any financial institution or retirement company with which you or your spouse have accounts.  This information can occasionally disappear once the divorce is filed, and while your attorney may be able to subpoena or otherwise obtain this information, this comes at a cost. 

 

You should also make a list of any valuable property that you brought into the marriage, or that you have received as a gift or as an inheritance.  Under Arizona law, these are likely to be determined to be your sole and separate property. 

 

You should make a separate list or inventory of every item of personal property that you and your spouse own.  This can be done with a video camera walking room to room and panning across each room to show the furniture and appliances in each room, or can be done by a spreadsheet or otherwise.  If for some reason you are unable to return to the marital home, you will want to have already completed this list ahead of time.

 

Finally, you will want to find a trusted friend or family member, with whom you can store this information and copies of any important documents that you do not want to disappear or become lost. 

 

If you are considering a divorce or legal separation, and would like to speak with an experienced family law attorney about your rights, responsibilities, and ways to protect yourself in your upcoming divorce, please call 800 899-2730 and ask to speak with attorney Douglas C. Gardner, or visit our website at yourarizonadivorcelawyer.com.

Arizona Attorney Discusses Child Support and Spousal Maintenance Issues in Bankruptcy

Monday, March 7th, 2011

As a lawyer with many cases in Phoenix and Mesa, Arizona and throughout the state, I often encounter family law cases in which a bankruptcy has been or will be filed. Both parties need to understand what will happen with child support and spousal maintenance in a bankruptcy case.

First, from the point of view of the debtor or person filing bankruptcy in which case the debtor is obligated to pay child support or spousal support: bankruptcy will not discharge an obligation to pay child support or spousal maintenance. Bankruptcy can, in certain cases, discharge or eliminate other types of debts to a spouse or former spouse. However, child support and spousal support will need to be modified or terminated through the family law courts. If you have other debts to a spouse or former spouse which you want to eliminate in bankruptcy, you will need to hire an attorney that can answer your questions and help you through this difficult process. 

Second, still from the point of view of the debtor or person filing bankruptcy, but this time the debtor is receiving child support or spousal support: Your right to collect child support and spousal maintenance is not an asset that can be taken from you in bankruptcy. The income that you receive from actual payment of support will affect your bankruptcy, as more income may make it difficult to qualify to file for certain types of bankruptcy. You will need to ensure that your bankruptcy attorney is aware of any income you are receiving. You should also make sure that your divorce or family law attorney is aware of the status of any bankruptcy or of the potential that you will file for bankruptcy.

Third, from the point of view of the spouse or ex-spouse of a debtor, in which case the debtor is obligated to pay child support or spousal support to that spouse or ex-spouse: there is little to worry about a spouse or ex-spouse filing for bankruptcy as it pertains to child support and spousal support. These debts are not dischargeable in bankruptcy, meaning the debts will continue to be owed even after your spouse or ex-spouse completes bankruptcy. It may even be beneficial, as your spouse or ex-spouse will eliminate other debts and have more funds available to meet his or her obligations to you. Bankruptcy also gives child support and spousal maintenance a “priority,” meaning they will get paid before most other debts will get paid. However, if your spouse or ex-spouse owes you other money for property issues, or is obligated to pay debts that your name is also on, you will need to contact a bankruptcy attorney that is also familiar with divorce and family law issues to ensure that your rights are protected.

Finally, from the point of view of the spouse or ex-spouse of a debtor, and the spouse or ex-spouse is obligated to pay child support or spousal maintenance to the debtor: your spouse or ex-spouse’s decision to file for bankruptcy does not eliminate your ongoing obligation to pay support. The payments will continue to go to your spouse or ex-spouse, and will not be taken by the bankruptcy court or the bankruptcy trustee. If you need to modify or reduce your child support or spousal support, you will need to contact a family law attorney to assist you.

If you have any questions regarding bankruptcy or family law issues, please contact McGuire Gardner, PLLC by calling (480) 829-9081, or check us out on the web at www.mcguiregardner.com.

TEMPE/EAST VALLEY ATTORNEY DISCUSSES ATTORNEYS FEES

Friday, July 16th, 2010

TEMPE/EAST VALLEY ATTORNEY DISCUSSES ATTORNEYS FEES

The Court in Family Law and Divorce cases has the ability to order one party to pay all or some portion of the other party’s attorneys’ fees and costs.  The Court will look at two issues in determining if such an order is appropriate.

First, the Court will look at the income and financial status of each party.  The Court has the discretion to order the party with greater financial assets and income to pay all or some portion of the other party’s attorneys fees.

Second, the Court will consider the reasonableness of the positions taken by each party.

While the Court may make and award of attorneys fees for either or both issues, the Court must consider both issues before making an award of attorneys fees.

For more information, or to contact an Arizona divorce lawyer, please check out our website at www.yourarizondivorcelawyer.com.