Why Divorcing Women Need to Pay Careful Attention to the Date of Separation

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Why Divorcing Women Need to Pay Careful Attention to the Date of Separation

To read this article directly on the ForbesWomen and/or to leave a comment, please click on this link: http://www.forbes.com/sites/jefflanders/2011/09/28/why-divorcing-women-need-to-pay-careful-attention-to-the-date-of-separation/

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When did you know your marriage was truly over? Was there one particular moment that defined “the end?” What did you do after coming to that realization?

If you’re divorcing, you probably have to answer questions like those all the time. To me, it seems as though drawing the proverbial line in the sand helps friends and family cope with the break-up. Conversations, events –even emotions –can be duly partitioned. “This” happened before the separation. “That” happened after.

In many ways, the courts want to be able to do the same thing. But, the courts are not interested in establishing a timeline for social or emotional reasons. Instead, the courts need to establish a formal Date of Separation (DOS) in order to determine various property interests and to establish valuation dates for certain assets.

Unfortunately, though, pinpointing the actual DOS can be tricky.

For starters, different states determine the DOS in different ways.

In some states, the DOS is the date you or your husband actually physically relocates from the marital place of residence. Or, it can also be the date you physically separate, even if it’s in the same house. (Maybe you sleep in the bedroom, while he sleeps in the den.) In other states, the DOS is the date on which one spouse officially informed the other that his/her intention is to file for divorce.
Still others define the DOS as the date when the legal separation agreement is signed or the actual divorce papers are filed in a court of law.

Adding to the confusion, even some of these guidelines can be interpreted in different ways. Your husband could say he didn’t believe you were “serious” the first time you informed him that you were going to file for divorce. Or, he could argue that he physically relocated, but didn’t formally change his address (or that it was only a trial separation and neither party had any intention of divorcing at that time).

Why does it matter?

The DOS matters because it draws a very significant line of demarcation. In general, all assets and income acquired from the date of marriage to the date of separation is marital property; anything acquired after the date of separation is separate property. (For a more detailed discussion, see my earlier post about the differences between marital property and separate property.)

And, the implications can be dramatic. For example, the Date of Separation can be a major issue if one spouse is awarded a big bonus, commission or stock options just after (or before) he or she claims to have separated from the other spouse.

Or, remember the questions swirling around the separation of Maria Shrive and Arnold Schwarzenegger? He reportedly had signed a new movie contract. But, did that happen before or after Maria moved out of the house – and was that the actual DOS? If Schwarzenegger signed a new contract before that date, then the income and assets from that contract are marital property. Anything he signed after that date is separate property and may not have to be divided.

You also don’t want to be responsible for the thousands of dollars of debt your husband starts racking up with his new girlfriend. Let’s hope he doesn’t start charging those trips until after the DOS!

In addition to determining various property interests, the DOS can also establish valuation dates for certain marital property assets. For some assets, the DOS and valuation dates will be the same. For others, the valuation date may be the Date of Trial. How and why a valuation date is determined is a complicated topic, and I’ll explore these particulars in more detail in a future blog post.

As you can see, it makes sense to be judicious about the determination of the DOS. Since you’ll want the date to be most advantageous to you, it’s essential that you assemble a qualified divorce team to help you sort through all the particulars of your case.

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Jeffrey A. Landers, CDFA™ is a Divorce Financial Strategist™ and the founder of Bedrock Divorce Advisors, LLC (http://www.BedrockDivorce.com), a divorce financial strategy firm that exclusively works with women, who are going through, or might be going through, a financially complicated divorce. He also advises women business owners on what steps they can take now to “divorce-proof” their business in the event of a future divorce. He can be reached at Landers@BedrockDivorce.com.