The process of getting a “routine” divorce may be complicated – but a complex divorce involves unique and challenging issues. These complex divorce issues require skill and strategy to achieve a fair and reasonable outcome. Clearly, a case involving a family business or professional practice must be considered as a complex divorce, because valuation issues are likely to arise. Similarly, a case involving executive compensation presents special issues. Other cases are complex because they involve issues that may be overlooked or botched in the hands of the wrong lawyer.
- Asset Tracing or Transmutation
Comingling, retitling, transmutation and tracing are related concepts that come into play in equitable distribution of marital property. Pennsylvania case law holds that separate property may be converted into marital property by re-titling in joint names, but may not be converted by comingling, in which separate property is deposited into an account titled in the individual name of one spouse that contains marital property. Pennsylvania also rejects transmutation, in which separate property is converted when marital funds are used for maintenance, improvements or debt service associated with separate property. The Divorce Code, 23 Pa.C.S. § 3501(b), establishes a presumption that property acquired during the marriage is marital property. Still, divorcing spouses may prove that property acquired during the marriage is not marital property, if it qualifies under one of the § 3501(a) criteria, such as gifts or inheritance. When gifts or inheritance have been mixed with marital funds, it might become necessary to trace the separate property element (so that the contributor may get credit), or seek a diminishing credit under Sergi v. Sergi, 506 A.2d 928 (Pa.Super.1986), or request an unequal division of property under 23 Pa.C.S. § 3502(a).
- Double dipping
If an income-producing asset has been divided in equitable distribution, the same asset cannot be used as an income source for paying alimony during the same time period. For instance, it might be unfair for a divorced spouse to pay alimony from his or her share of a pension that has been divided in equitable distribution. This concept has been recognized and adopted by Pennsylvania courts. Berry v. Berry, 898 A.2d 1100 (Pa.Super. 2006); Diament v. Diament, 816 A.2d 256, 277 (Pa.Super. 2003) (advance of marital assets); Miller v. Miller, 783 A.2d 832 (Pa.Super. 2001)(proceeds from sale of marital property); Rohrer v. Rohrer, 715 A.2d 463 (Pa.Super. 1998)(retained earnings of a business); Kokolis v. Kokolis, 83 Pa.D. & C.4th 214 (Ally. 2006)(pension in pay status), affirmed, 927 A.2d 663 (Pa.Super. 2007); cf. McFadden v. McFadden, 563 A.2d 180 (Pa.Super.1989)(pension in pay status).
- Date of separation
Separation is legally important for two main reasons: (1) the date of separation kicks off the waiting period for a unilateral divorce; and (2) the date of separation is the cutoff point for identifying marital property. Like most states, Pennsylvania does not recognize a “legal separation,” as it did prior to 1980. Whether or not a couple is separated, in the eyes of the law, depends upon the circumstances. Couples can be separated, even while living under the same roof. Some factors that might come into play would include: cessation of a sexual relationship, separation of financial accounts; and representing to the community that the parties are separated. For the separation period to commence, there must be an intention by one party to dissolve the marriage and that intention must be clearly manifested and communicated to the other party. Sinha v. Sinha, 526 A.2d 65 (Pa. 1987).