A COMPASS HEADING FOR DIVISION OF THE MARITAL ESTATE

January 23, 2013 § 4 Comments

In an equitable distribution case where there was a temporary order that provided for no support, is the date of that temporary order the demarcation line for purposes of classifying and valuing marital property?

Before we talk about how to answer the question, let me remind you that the the so-called demarcation line is important to delineate in an equitable distribution case. Depending on where the line is drawn, assets can increase or decrease by tens of thousands of dollars, or even lose value altogether, and your client who purchased a new pickup after the separation may be terribly chagrined to learn that his philandering estranged wife owns a part of it.

The line of demarcation is something we’ve talked about before here and here.

The general rule, in essence, is that marriage is deemed over for the purpose of classifying or valuing assets on entry of the final judgment, and any property or value acquired before that date is marital, unless there was a temporary order, in which event the date of the temporary order becomes the demarcation line. There are some exceptions in case law, but this is the general rule.

So, to get back to the original question, the COA confronted this very issue in the case of Mauldin v. Mauldin, decided January 15, 2013.  In this case, Jim and Donna Mauldin found themselves in equitable distribution. Jim had bought some assets after a temporary order was entered, and the judge nonetheless included them among the marital assets subject to division. The COA opinion, by Judge Irving, stated:

¶13. Although the divorce decree did not specifically state the date that the marriage ended for purposes of classifying marital and separate property, it is clear that the chancery court used the date of divorce rather than the date of the temporary order. As previously stated, absent the entry of a separate-maintenance or temporary-support order, marital property continues to accumulate until the date of divorce. Although the chancery court entered a temporary order in this case, the order did not provide for temporary support. Therefore, Jim and Donna’s marital assets continued to accumulate until the date of their divorce. Accordingly, even though Jim purchased his motorcycle and his truck after his separation from Donna, the chancery court properly classified these assets as marital property. Additionally, the increase in Jim’s retirement account since his separation from Donna is marital property because the increase occurred during the marriage. This issue is without merit. [Emphasis added]

This case underscores what I have pointed out before, that it can be a two-edged sword when you don’t get a temporary support order entered. Yes, your client gets to dodge the bullet of any temporary support, but the asset values, as well as the inventory of marital assets, continue to change, often not in your client’s favor.

Put some thought in the strategy and tactics you should best employ for the benefit of your client in these cases. What is best for one client will not be the same for another. Knowing the rule, you will be in a position to plot the best course. 

 

 

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§ 4 Responses to A COMPASS HEADING FOR DIVISION OF THE MARITAL ESTATE

  • […] The line of demarcation — also referred to in the cases and in legal circles as “the valuation date” — is an important concept in divorce law. It’s something we’ve addressed here in prior posts. […]

  • randywallace says:

    Take a look at Collins v. Collins which was handed down yesterday by the MSSC. http://courts.ms.gov/Images/Opinions/CO84625.pdf

    It would appear that the date of demarcation is now left to the discretion of the Chancellor and can be “either the date of separation (at the earliest) or the date of divorce (at the latest)” and perhaps anywhere in between provided that justification can be made that on a specific date “the assets cease to be marital and become separate assets.”

    Discretion to the Chancellor is a good rule for this as each situation is different.

    • Larry says:

      Ironically, as your comment popped up I was putting the finishing touches on a post for next week on this very point in the Collins case.

      I also discussed it earlier today with some attorneys, who pointed out that it will certainly make it more challenging to advise clients about strategy during a divorce vis a vis acquisition and appreciation of assets, income, and the like.

      Just last week, Debbie Bell mentioned at her seminar that the courts appeared to be moving toward a bright line rule based on the temporary order. Nope.

      • randywallace says:

        It will make it more challenging to advise clients. In theory, uncertainty should lead to more compromise provided that both parties are represented by competent counsel that will honestly advise them of the dangers. In practice, it will probably end up being more of a trap for the ill advised.

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