| Property Division in Divorce: Insurance Benefits |
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| In divorce, a critical issue impacting the treatment of insurance policies is whether the policy benefits are separate property or marital property. State divorce courts have reached varied answers on the question of whether a life insurance policy is separate or marital property. In some states, "whole life" insurance contracts have been held to be marital property and generally have been valued at their cash surrender value. "Term life" policies, on the other hand, which lack a surrender value, have not been considered divisible property. In states in which inheritances or gifts are classified as separate property, insurance proceeds usually are not treated as marital property for purposes of property distribution in divorce. Other courts have ruled that the proceeds of a life insurance policy purchased with community property should be treated as community property in a divorce. More... |
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| Attorney Fee Awards in Community Property States |
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| In an action for divorce under the common law, the power to grant a party attorney's fees and expenses is within the discretion of the court. Some courts exercise such power as a part of general equity and when warranted by the parties' relative ability to pay counsel fees. Numerous factors are considered by the court in awarding such fees, the most significant of which being the time spent and the services rendered by an attorney in representing a party in the divorce. More... |
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| Defenses in Fault-based Divorce: Condonation and Reconciliation |
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| States traditionally have considered condonation and reconciliation to be common law affirmative defenses to fault-based divorce actions. Under that scenario, the defendant was required to plead and prove the defense. In states that allow fault-based divorce and that have comprehensive divorce statutes, the general movement has been to limit or eliminate common law divorce defenses such as condonation and reconciliation. More... |
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| Defenses in Fault-based Divorce: Mental Illness |
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| Divorce statutes in most states consider several defenses in case of fault-based divorce, such as recrimination, condonation, reconciliation, collusion, and connivance. States traditionally have allowed mental illness as a common law affirmative defense in fault-based divorce actions, particularly against charges of adultery, cruelty, and desertion. Under a typical scenario, the defendant was required to plead the defense and prove that mental illness prevented the defendant from recognizing that the offending act was wrong. In states that allow fault-based divorce and that have detailed statutory schemes governing divorce actions, the general movement has been to limit or eliminate common law divorce defenses such as mental illness. More... |
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| Valuation of Closely Held Businesses in Divorce Proceedings |
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| Generally, divorce cases involving thorny property issues can be complicated to resolve. This especially is true when the marital estate includes a closely-held business. A closely-held business usually presents one of two scenarios in the divorce context. The business may be tied to one spouse who is responsible for the business's success. Distribution of the business to one spouse often creates asset allocation and business valuation issues. It presents the problem of valuing the business and structuring the parties' assets and liabilities in order to provide the other spouse with a comparably valued property distribution. If the business depends on the operating spouse's good will and management, which many closely-held businesses do, then the true value can suffer under the emotional stress common in divorce even if the business is distributed to the key-person spouse. A business having one value when operated by the key-person spouse can have a far different value when distributed to the non-operating spouse. More... |
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