Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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Back in July I wrote about the first-time homebuyer tax credit that applies to home sales occurring before December 1, 2009. However, there is some great news for prospective homeowners unable to squeeze in a purchase in that timeframe: Reuters is reporting that the credit may be extended for another six months. With bipartisan support in Congress and recent hints that President Obama will back such an extension, the amendment is likely to pass.

Also, we have received queries from readers regarding the effects of divorce on the credit. A common occurrence in divorces is that an ex-spouse's name continues to remain on a deed while he or she no longer lives in the residence. As long as the ex-spouse has not lived in the house at all over the past three years, and as long as the divorce was finalized three or more years ago, the ex-spouse will qualify as a first-time homebuyer because the house is not his or her primary residence. Of course, this assumes that the ex-spouse does not reside in other real property that he or she owns.

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The conclusion to my three part series on domestic issues and business owners will focus on support. Previously in parts one and two I discussed marital property, separation, divorce and equitable distribution. 

Support is divided into three general categories: child support, spousal support/alimony pendente lite (APL) and alimony.

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In Part One of Domestic Issues for Business Owners, I discussed the definition and value of marital property. In this post I will be highlighting how separation, divorce and equitable distribution can affect your business.

Separation

Separation is an important aspect in valuation of marital property, including business interests, because the date of separation identifies the ending date for assets to be included in the marital estate.

Divorce

There are two types of divorce, fault and no-fault. Even if you have established grounds for divorce under the fault or no-fault provisions of the Divorce Code, a divorce will not be granted until all economic issues are resolved.

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Starting and running a small business is tough enough. The domestic issue in the forefront of your mind is how the stress of running a business will affect the relationship of your marriage. However, you might want to consider how your marriage affects the assets of your business and understand how a divorce could affect the future of your business.

In this three part post, I highlight some of the issues that arise in a divorce which includes a business owned by one or both parties. Because of the complex nature of this type of divorce, it is difficult to cover all of the issues involved. However, these posts will help to provide some understanding of the basic considerations.

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Location isn't just important when you're looking to buy a home, but also when you may be thinking about a divorce. The practice of one party filing a divorce in a far removed county from the residence of either party, which could be the result of low filing fees or the desire to place the divorce action in an inconvenient forum for the other party was dealt a lethal blow by a recent Pennsylvania Superior Court decision. The court established that venue, or the proper court in which you must file for divorce, must be established in court and "on the record" and it is the obligation of the trial court to do so. Venue can be established by residence, written agreement of both parties attached to the Complaint or otherwise made a part of the record, or through participation of both parties in the divorce action as required by other Pennsylvania Rules. Strict compliance is required to establish proper venue and a Divorce Decree issued not in compliance with the above rules can be vacated.

Divorces can not be filed in non-residence counties except with the consent of both parties. While there are occasions where parties may desire to have the divorce action conducted in a county not of their residence, perhaps for privacy reasons, the consent of both parties is required. It is advisable for both attorneys and parties filing for divorce to carefully consider whether it is appropriate to bring an action for divorce in a county where neither party resides. 

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There are essentially two types of divorce in Pennsylvania, fault and no fault. A fault divorce requires one spouse to prove the other has done one of the following:

• Deserted him or her without a reasonable cause for at least one year;
• Committed adultery;
• Entered into the marriage while he or she was married to another;
• Endangered the life of the other spouse;
• Sentenced to a term of imprisonment for two or more years; or
• Committed indignities to the other spouse such that his or her life is intolerable and burdensome.

This type of divorce generally requires a hearing and the presentation of evidence by the “innocent” spouse in order to prove that one of these things has occurred.

By contrast, a no fault divorce can be granted in the following situations:

• Where one spouse has been institutionalized for the 18 months before the divorce is sought and where there is no prospect of that spouse being released from the institution for an additional 18 months;
• Where both Parties agree that the marriage is irretrievably broken and 90 days have passed since the start of the divorce action; or
• Where one Party believes that the marriage is irretrievably broken and the parties have lived apart for at least 2 years.

A no fault divorce does not necessarily require either of the Parties to prove why the marriage has failed, only that the Parties have no real possibility of reconciliation. Most divorces in Pennsylvania are no fault divorces.

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The day finally arrives. Your attorney calls you or perhaps notifies you in writing that the Divorce Decree has been handed down. At long last (maybe six months, maybe a year, maybe even three or four years) it is finally over.

Not true! In the famous words of the "political philosopher" Yogi Berra, “it ain’t over till it’s over”. The Divorce Decree (assuming no appeal) in many cases is not the end, and many important matters may still require attention before that Postnuptial Agreement or that decision obtained after a Hearing with blood, sweat and tears - the result you worked so hard to achieve - materializes.

Like many other things, the devil is in the details and taking care of the details is still required. For example, the failure to remove the ex-spouse as a primary beneficiary of life insurance issued through an employer may negate the provisions of a Postnuptial Agreement which provides that the ex-spouse should have no interest in life insurance proceeds or other property of the spouse at death. 

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I believe there is a general assumption that the divorce rate in Pennsylvania and around the country is continually rising. It seems we are constantly bombarded with the statement that "half of all marriages end in divorce." But is that really the case? A recent examination of the marriage and divorce statistics released by the Pennsylvania Department Health indicates otherwise. The marriage and divorce statistics for Pennsylvania go back as far as 1950. Some of the more interesting statistics indicate that the number of marriages in Pennsylvania peaked in 1973 at 101,076 and has been steadily decreasing. The most recent year for which data was available was 2006, when there were 71,511 marriages in Pennsylvania. Along with the decrease in the number of marriages, there has been a similar decrease in the number of divorces, with the number of divorces peaking in 1991 at 41,321 and has been continually decreasing to 34,894 in 2006. Divorce rates seem to be declining, although not nearly as quickly. The divorce rate is calculated as the number of divorces per 1,000 people. In 1990, the divorce rate in Pennsylvania was 3.3. Then in 1995, it declined to 3.1 and has remained steady through 2004 (last year statistics were available).The good news for Pennsylvania residents is that our divorce rate is well below the national rate of 3.6.