Charlottesville Divorce Lawyer Rob Hagy

Ex Wife Can ‘Claw Back’ Millions In Hidden Assets.

When marriages go bad, feelings can be raw, making it tempting to want to hide assets to punish your soon-to-be ex. But if you get caught, the consequences can be severe, as a recent case shows us.

The couple in the case, Robert and Janet Foisie, decided to divorce in 2010. They went to mediation, where they agreed to fully disclose and equally divide their assets. Robert also allegedly told Janet during mediation that he had no “offshore assets.”

A year later, after both spouses had allegedly fully disclosed their assets in a Connecticut family court, they executed a divorce settlement leaving each of them with $20 million in securities and real estate.

After the divorce, however, Janet learned Robert did not disclose another $4.5 million in securities and millions more in promissory notes stashed away in a Swiss trust. Meanwhile, he had donated an estimated $39 million to his alma mater, Worcester Polytechnic Institute, which apparently left him insolvent when he died in 2018.

Janet sued WPI in federal court in Massachusetts, claiming the donation was a “fraudulent conveyance”that it shouldn’t have received and that she should be able to “claw” it back.

WPI argued that under Massachusetts law, a divorce proceeding must be “imminent” in order for a spouse to be considered a creditor entitled to pursue assets that were fraudulently transferred to a third party in order to thwart property division or alimony.

A trial court sided with WPI, but a federal appeals court reversed, ruling that under the state law in question — which was based on the Uniform Fraudulent Transfers Act — a creditor is simply “a person who has a claim.” This meant Janet was not barred from being a creditor just because the divorce already happened.

Now Janet will have the opportunity to seek the assets she’s apparently entitled to. While Robert did not benefit materially from the donation to his alma mater (except perhaps with an extremely large tax deduction), others hide assets in a variety of ways. This case shows that doing so is very unwise. The better approach is to talk to your family law attorney about how to get the fairest property division you can within the bounds of the law.

New Battles Over ‘Crypto’ Are Now Becoming An Issue In Divorce Cases!

Battles over ‘crypto’ becoming an issue in divorce cases

There’s an awful lot of buzz in the news about “cryptocurrency,” which refers to any form of currency that exists either digitally or virtually and is secured by cryptography, enabling bearers to use it for secure online payments without third-party involvement. Cryptocurrency — of which the most well-known is Bitcoin — is not issued by any central authority such as the U.S. Department of Treasury. Instead, it is “mined” or purchased from cryptocurrency exchanges, making it purportedly immune from government interference or manipulation. It’s not often used to purchase goods or services; instead, it’s more typically used for trading and investment. This sounds exotic, but as of late 2021, roughly a third of American adults under 30 had invested in or used crypto, with the numbers on the rise. As crypto has become more commonplace it has caused issues in the divorce process. That’s because crypto-based assets, which are traded on a decentralized network, can be highly lucrative investments but are difficult to track, making it tempting for a spouse to underreport how much they have or to try and hide it in “online wallets” that can be challenging to access without the “digital key.” Crypto can also be difficult to value, given its volatility and many different types are on the market, which makes it hard to determine how to divide it. The takeaway is that if you and/or your spouse have cryptocurrency, it’s important to work with an attorney who is familiar with this new type of asset and in a position to negotiate a fair division and who can help you track down holdings if you believe your spouse is concealing them.

WIFE CAN'T SHARE INCREASE IN RETIREMENT ACCOUNT VALUE!

Wife can’t share increase in retirement account value

The North Carolina Court of Appeals recently ruled that appreciation in a husband’s retirement account that occurred after a couple separated could not be divided at divorce.

The couple in question got married in 1995 and had four children together before the wife filed for divorce in 2016. According to the wife, they separated in August 2015 when the husband “willfully abandoned” her.

When they got married, the husband worked for IBM. Before the marriage, he acquired a retirement plan from IBM which he later rolled into a Vanguard account that, on the date the couple separated, was worth $412,000, of which the court deemed $100,000 to be marital property and $312,000 to be separate property. By the time of distribution, the account had increased to $496,000 ($120,000 in marital property and $376,000 in separate property). Despite that split, the court divided the entire $84,000 in passive gains, deciding that the husband hadn’t established any of this increase as separate property.

But the court of appeals reversed, finding that the trial court should have only included the $20,000 increase in the marital portion as part of the estate and ordering that it to go back and redistribute the assets accordingly.

BUY-SELL AGREEMENTS CAN MINIMIZE BUSINESS DISRUPTION DUE TO DIVORCE

Buy-sell agreements can minimize business disruption due to divorce

If you operate a business with one or more other partners, and one of you goes through a divorce, there’s a real risk this could impact how the business operates going forward. That’s because your share in the business, which presumably became valuable through your hard work, could be divided in a divorce

In “community property” states, where assets acquired during marriage are split down the middle, this means the spouse of a divorcing co-owner could walk away with a substantial interest in the business and a substantial say in running its affairs. In “equitable distribution” states, where a divorcing couple’s assets and liabilities are divided up based on what the court deems fair under the circumstances, a co-owner’s spouse could conceivably walk away with an even bigger share. That’s why it’s a good idea for any small business to have a “buy-sell” agreement: a binding contract between co-owners of a business that sets rules about when an owner can sell their interest, who can buy an owner’s interest, and the price that should be paid.

In terms of divorce, a buy-sell agreement could require the ex-spouse of a newly divorced co-owner to sell any interest he or she received in the divorce back to the company or to its other owners.

Alternatively, if the spouse of an owner receives an interest in the business during a divorce, a buy-sell agreement can automatically convert that interest to a non-voting interest. Or it can give the other owners the right of first refusal to buy the spouse’s newly received interest if he or she decides to sell it.

If you’re the one who ends up getting divorced, a buy-sell agreement won’t necessarily prevent your soon-to-be ex from taking a good chunk of your own financial stake in the company or taking a bigger portion of other assets instead. But at least your partners would be protected, and your soon-to-be ex wouldn’t have a say in management decisions, which could help minimize business disruptions going forward.

USB Disclosure Could Result in Boon to Ex-Spouses.

Read an interesting article on the Time Magazine web site about the pending disclosure by Swiss bank USB of the names of 4,450 U.S. individuals that used the foreign bank's accounts to hide money. This could result in ex-spouses reopening divorce cases to seek court division of assets which were not disclosed during the property distribution of portion of their divorce proceedings.  It may also have an impact on spousal and child support proceedings as well, meaning the disclosure could result in modification proceedings.