Articles Posted in Property Division

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A premarital agreement, also called a prenuptial agreement, is an agreement between prospective spouses regarding the disposition of the couple’s assets in the event that the marriage ends. A premarital agreement applies not only upon divorce, but also upon the death of one of the spouses.

Prospective spouses may enter into a premarital agreement for any number of reasons, most of which are valid. Rhode Island law provides for certain default rules to be applied in the event of death or divorce, and these rules may not work for all couples. Thus, couples can clarify their intent to have a different set of rules apply in their marriage by creating a premarital agreement. Most often, Rhode Island prenuptial agreements are designed to provide the parties financial clarity.

The Enforceability of Prenuptial Agreements

As a general rule, validly created Rhode Island premarital agreements are considered binding against the parties. In Rhode Island, courts look to the Uniform Premarital Agreement Act when determining whether an agreement is valid. Notably, Rhode Island courts place a heavy burden on the party seeking to invalidate the agreement.

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When a couple goes through a Rhode Island divorce, there are many issues that must be resolved. For example, the division of the couple’s assets, who will take on the responsibility for the marital debt, which party will get to remain in the marital home, and whether there is the need for spousal support. If the parties have not entered into a valid prenuptial agreement, Rhode Island courts will apply a set of default rules to resolve these issues. However, many couples are not satisfied with the default rules and choose to enter into a Rhode Island prenuptial agreement.

What Is a Prenuptial Agreement?

A prenuptial agreement, also called a premarital agreement, is a contract that is entered into in anticipation of marriage. Under Rhode Island’s Uniform Premarital Agreement Act, a premarital agreement can cover a broad range of issues, including:

  • The rights of the parties to use property;
  • The disposition of property upon separation or divorce;
  • The modification or elimination of spousal support;
  • Ownership of either parties’ life insurance benefits; and
  • The choice of law governing the divorce proceeding.

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The issue of how a couple’s assets and liabilities are divided up is one of the most contentious issues in many Rhode Island divorces. Indeed, it is not as simple as merely dividing everything in half. Instead, Rhode Island uses an equitable distribution model when determining what each spouse is entitled to after a divorce is finalized.

Typically, an equitable distribution framework consists of three parts. First, a court must determine which assets are considered marital property. Importantly, nonmarital assets are subject to equitable distribution. However, the determination of whether something is a marital or nonmarital asset is not always straightforward.

Marital Versus Nonmarital Property

Generally speaking, most assets acquired during a marriage are marital property. However, inheritance, gifts, and proceeds from lawsuits are not typically considered marital property even if they are received during the marriage. Thus, in a recent Rhode Island divorce case the court determined that a car that was purchased during the marriage with funds that Wife was gifted by her parents before the marriage was not marital property subject to equitable distribution. The court also determined that a subsequent gift from Wife’s parents to Wife was considered nonmarital property although it was deposited in the couple’s joint bank account.

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One of the most contested issues in any Rhode Island divorce is the division of property. While the concept of dividing up a couple’s assets may sound straightforward, in practice the process can be quite complicated.

Rhode Island is an equitable distribution state. Thus, courts employ a three-step approach when dividing marital assets. First, the court will determine which of the couple’s assets should be considered marital property subject to equitable distribution and which assets are an individual spouse’s separate property. As a general rule, marital property consists of the assets that were acquired during the marriage. However, certain exceptions exist. For example, inheritance and gifts from third parties are not considered marital property, even if they are assigned or received during the marriage.

Once a court determines which assets are marital property, the court will then consider a list of factors to determine how to divide those assets. These factors are set out in Rhode Island General Laws § 15-5-16.1, and include:

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In a case heard by the Rhode Island Supreme Court, the court evaluated a lower court decision involving hidden assets during a divorce. The parties were married for about nine years by the time the divorce was finalized. The divorce trial took 12 days and the decision issued was 59 pages. The family court magistrate issued its decision in March of 2016 with findings that included that there were irreconcilable differences and the breakdown of the marriage was irremediable. Thus, the divorce was granted.

However, a couple of months after the magistrate issued their decision, the wife filed a motion to allow further evidence to alter or amend judgement. In this motion, the plaintiff argued that there was newly discovered evidence that showed her ex-husband had concealed financial information during the divorce proceedings. The magistrate dismissed all of the issues except for one. The remaining issue involved the defendant’s failure to disclose at trial that he had sold a specific piece of property referred to as the Tourtellot property.

The defendant had purchased the Tourtellot property before the marriage using his own separate funds. However, during the marriage the plaintiff had helped to improve the property, which increased the value. Therefore, the magistrate found that the failure of the defendant to disclose during the trial that the property was sold affected the rights of his ex-wife. The magistrate then compensated the plaintiff by awarding her 60% of the difference between the purchase price and the sale price of the property. He also ordered her ex-husband to pay this amount in one lump sum.

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When a couple gets divorced, one of the first things the court needs to figure out is which property is marital property and which property is separate property. Typically, any property brought into the household during the marriage will be considered marital property. The biggest exceptions to this rule are when the property is given as a gift or bequest to only one of the spouses. Rhode Island is an equitable distribution state, which means that marital property is split “equitably” between the parties during a divorce. It’s important to have a basic understanding of these concepts because it is how the court decides which property is subject to division. Of course, laws can be complicated and only a qualified Rhode Island divorce attorney can give you a true sense of how a court is likely to split property between a couple.

Post-Employment Compensation

In the vast majority of cases, future earnings are not considered marital property and are thus not subject to division. However, this does not count compensation that was earned during the marriage which will be paid later. For example, if one spouse participates in a 401k employer match program, the money put into the account by both the employer and the spouse (including the interest that is earned) will usually be subject to division. However, any contributions by either the employee or employer (as well as the interest from those contributions) after the marriage ends will typically be the sole property of the employee spouse.

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Rhode Island is one of the minority of states that recognize common-law marriage. However, there are certain things that are required in order for a court to decide that a couple is in a common-law marriage. One requirement specifically was recently found to be determinative in a case before the Rhode Island Supreme Court. They held that a couple that had been together for 23 years was not deemed to be in a common-law marriage because at different times they represented their relationship in different ways. If the court had found the couple to be in a common-law marriage, it could have affected the rights of the parties upon separation. If you live in Rhode Island and are considering divorce or separation after a common-law marriage, you should contact a skilled Rhode Island divorce attorney today.

Lower Court Ruling

The lower court had held that the couple was in a common-law marriage. They based their reasoning on the fact that the couple had been together for 23 years and had frequently told others that they were married. The court heard evidence that the couple would sometimes wear wedding rings, and they raised a child together. The man in the couple referred to the child as his son, even though they were not biologically related. In 1991, the couple became formally engaged but never had a wedding ceremony. The judge held that there was “clear and convincing proof” of the couple having a mutual and present intent to be married.

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The United States Court of Appeals for the First Circuit recently held that the ex-spouse of a deceased man was entitled to the proceeds of his IRA account. This case is informative for people who are going through divorce and having their soon to be ex-spouse named as a beneficiary on their investment or insurance accounts. If you are considering divorce, you should consult a knowledgeable Rhode Island divorce attorney to make sure that all of your designations are as you want them.

Facts of the Case

This case revolves around an Individual Retirement Account (“IRA”), which is a type of investment account intended to help finance retirement. A man was married and opened an IRA account through his employer. At that time he named his wife as the beneficiary of the account in the event of his death. A couple of years after the account was created he got divorced. However, he never removed his now ex-wife as the beneficiary of the IRA.

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Currently, pets are treated as property in divorces. However, a bill proposed in last year’s legislative session of the Rhode Island state government would change that. Though it has stalled in committee, the bill would allow judges to consider the best interests of the animal when pets are involved in a divorce. If you are considering a divorce and there is a pet involved, you should contact a skilled Rhode Island divorce attorney as soon as possible. An attorney can help you argue that you are entitled to the pet under state law, whether under the current law or this one if it passes next session.

Pets in Divorce

Many of us consider our pets part of our family. Rhode Island (and other state courts) take a different approach, however. The current law considers pets as property, not much different than a car or painting. Occasionally, judges presiding over a divorce will look at who is more bonded to the pet and more capable of taking care of it to decide who should keep the pet. While judges have the discretion to take this approach, in many cases the judge will use a traditional property analysis to determine who gets to keep the pet.

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Earlier this year, the Rhode Island Supreme Court issued a decision that gives further clarity as to what is considered marital property and what is not. In this case a couple was going through a divorce. At the trial court level, the judge divided the property that she found to belong to the couple together, and allowed the wife to keep some of the property as her own since it was determined to be her separate property that she was given as a gift. The Rhode Island Supreme Court agreed with most of the lower court’s findings, but found that the wife’s earnings during the marriage should have been considered joint marital property. Therefore, it should have been divided upon divorce, even though she kept it in a separate bank account in only her name.

As this case illuminates, the determination of what is considered marital property and is thus subject to division and what is separate property is very fact specific. That’s part of why it is so crucial to work with an experienced Rhode Island divorce attorney if you are going through a divorce.

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