Sorting Out Crops, Lawsuits, Bonuses & Other Odd Property

timeshare divorceBy Jennifer M. Paine

Cordell & Cordell Divorce Lawyer

Most of the personal property you accumulated during your marriage is easy to divide when you divorce—not easy in the sense that it is pleasant to do, but easy in the sense that the court has well-established rules for valuing and dividing it.

You may not find it pleasant at all, for example, that your ex-to-be is entitled to exactly one-half of your retirement for the amount you acquired between your marriage and your divorce, even though you were the only one who worked, but this is the rule in almost all states.

But there is some personal property that is either too difficult to value without risky assumptions, too difficult to divide, or both. Here is how to deal with some of the more common types of odd property items.

Crops & Mineral Rights – Crops are usually a property right separate from the land on which they grow.  So, too, are minerals below the land.

If you have already divided these during your marriage, you should receive payment periodically for them (e.g. for annual harvesting), and you should decide whether to include the payment as income to the recipient, for support purposes or as property to be divided between the two of you.

If you have not divided them during your marriage, then be sure to do so during your divorce, particularly if your ex-to-be is retaining property that is potentially rich with crops and/or minerals.

You may do this by selling the rights during your divorce and splitting the profits, dividing the profits in the event of a future sale, alternating years in which you each receive payment or property or asking for your appraiser to appraise the property with the crops/mineral rights included. Note that the last option makes assumptions about the market that you may not wish to take.

Pending Bonuses – Bonuses for work performed during the marriage are almost always marital property, but what should you do if payment is delayed until after divorce? Similarly, how will you know if your then-ex receives a bonus?

If you are settling your case, require that you each disclose any bonus received (and, if not, forfeit it entirely) for the year in which you were divorced. This may happen by requiring disclosure of the pay stub, a letter from HR, a tax return or any number of these. Then, decide upon a percentage to award the other spouse, such as one-half for the prorated amount that is allocable to the months of your marriage. For example, if you were married for six months, then one-half of one-half of the bonus goes to each of you.

If your case goes to trial, ask the judge to order these things.

Pending Personal Injury Lawsuit  – Similarly, a personal injury lawsuit that settles or results in judgment after your divorce, for an injury that either of you sustained during the marriage, is also potentially marital property. The injured spouse is going to assume the award is his or hers; after all, that spouse sustained the injury.

However, most personal injury lawsuits will include a claim for the other spouse for loss of services (consortium claims), and most awards will include compensation for economic damages (such as for lost pay, reimbursed medical bills, etc.) in addition to pain and suffering. The pain and suffering award belongs to the injured spouse, the loss of services to the non-injured spouse and the rest can, potentially, go to both of you.

Pending Workers’ Compensation Claim – By comparison, a workers’ compensation claim is entirely for loss of wages, not pain and suffering. For some employees, the workers’ compensation benefits will be paid regularly for loss of pay, and there should be a back-payment for the time between the date of work loss and the date benefits went into effect.

Talk with your attorney to decide whether to treat that back-payment as property to be divided between the two of you or as income to the recipient for support purposes.

Taxes – If you divorce before the end of the tax year, and cohabited prior to this, decide who gets to claim the marital home for tax purposes. This includes deductions and credits for such things as mortgage interest, property taxes, certain energy-saving repairs and so forth.

For example, mortgage interest is a sizable deduction and is one that both of you will probably want to take if you cohabited, and you could trigger an audit if you both deduct all of it.

You could simply defer to the tax code. This tends to favor the person residing in the home the longest, the person with the higher income or, in some cases, both. But the tax code also usually allows divorcing spouses to deviate and come up with their own plan.

The best thing to do is meet together with a CPA to decide whether to delay your divorce until after December 31st or to divide the exemptions, credits and deductions at tax time. You could also have one spouse take them and pay a percentage of the return to the other spouse, or have one spouse take them and include the refund as income for purposes of support.

Whatever you do, don’t assume that only the property you each have now should be divided when you divorce. These future payments are valuable, sometimes even more valuable than more straightforward items, and  should be addressed in your divorce.

 

Jennifer M. Paine is a Michigan Divorce Lawyer with Cordell & Cordell. She is licensed to practice in Michigan, and has been admitted pro hac vice in Illinois, Ohio, and the United States Court of Federal Claims.

 

Ms. Paine received her Bachelor of Arts in English and Mathematics from Albion College and graduated Summa Cum Laude. She received her Juris Doctorate from MSU College of Law and graduated Summa Cum Laude.

End of Content Icon

Leave a Reply

Your email address will not be published. Required fields are marked *