Understanding Marital Property in an Equitable Distribution State

Divorce is an issue that approximately one in three Americans will face in their lifetime.  When divorcing, you have to make a lot of one time financial/economic decisions that you cannot undo once the divorce is settled.  From your first day of marriage, you and your spouse will start to accumulate assets and debts that will become part of your mutually owned marital property.  Therefore, first and foremost, you should have a general understanding of marital property if you are contemplating or going through a divorce.

Most often people think marital property is automatically divided 50/50, which is not the case in Alabama.  If the divorce is uncontested, the parties can agree between themselves on the division of marital property; however, if the divorce is contested, all marital property will be divided in an equitable fashion according to the Court unless otherwise agreed to by the divorcing spouses.  Equitable simply means “what is fair, NOT NECESSARILY EQUAL.”

So what is marital property?  Marital Property is any and all property, real or personal, acquired by the parties during the marriage and used regularly for the common benefit of the marriage.  It is also sometimes referred to as joint property.

With a contested divorce, if evidence indicates that certain assets were acquired during the marriage and there is no evidence indicating that one spouse has received those assets by gift or inheritance, then those assets are generally marital property and are subject to division.  Examples of marital assets can include:

  • The marital home
  • Vehicles
  • Household furniture and furnishings
  • Joint checking or savings accounts
  • Pensions and retirement plans
  • Stock and stock options

Separate property is property owned prior to the marriage and property received by gift or inheritance during the marriage.  A party’s separate property is that property over which he or she exercises exclusive control and from which the spouse derives no benefit by reason of the marital relationship.  The Court does not have the right to distribute any separate property that was obtained before or during the marriage, i.e., gifts, inheritances — UNLESS these gifts and inheritances have been used for the common benefit of the marriage.

Like assets, debts are typically incurred in both short term and long term marriages.  Any credit card debts, mortgages, medical bills and other loans will become part of you and your spouse’s marital property, and they will be divided along with your other marital property.   With contested divorces, the Courts try to equitably divide marital debt just as they do marital assets.  Again, equitable simply means “what is fair, NOT NECESSARILY EQUAL.”   The Courts may look at:

  1. Who incurred the debt?  Was it the personal individual debt of one spouse or was it the joint debt of both spouses?
  2. The purpose of the debt?  Was the debt for the benefit of an individual spouse or for the common benefit of the marriage?
  3. What are the parties financial circumstances?  Who can afford to pay the debt and who cannot?

If the circumstances warrant it, the Court using its discretion, can order one spouse to pay the marital or joint debts of the parties, assign the debt of one party to another and/or equitably divide the debt and the obligation to pay it between the Husband and Wife.

If you are contemplating or going through a divorce, you should take the time to review your individual situation with an experienced attorney who can protect you and your best interests.  Family and divorce practice requires experience in financial, property, estate and divorce law.  Our role at Rahmati Law Firm, LLC is to provide the comprehensive representation you need to understand and protect your personal and family interests.  Our attorneys stand ready to assist you in preparing for the next step in your life.

 “No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.”


Are You a Property Owner? Here’s What You Need to Know…

There are many types of claims made as a result of injuries on another person’s property under Alabama law and they are commonly referred to as Premises Liability claims.  Injuries that lead to Premises Liability claims can happen during any season; however, winter months like the Tennessee Valley is accustomed to enduring tend to be particularly hazardous, with emergency rooms often seeing an increase in the number of patients who’ve had a dangerous encounter with a patch of ice.  It’s important that every property owner and/or possessor have a basic understanding of Premises Liability laws to ensure they are protected in the case of an accident or injury on their property.

Slip and fall

Defining Premises Liability

Premises Liability refers to the responsibility a landowner and/or possessor of a property has for injuries and accidents that occur on their property.  A Premises Liability claim might be filed for a wide variety of reasons; however, the most common is when a person is injured on the property of another.  Alabama law states that property owners/possessors have a legal obligation to take measures to ensure that visitors on their property are kept reasonably safe from harm; however, a property owner/possessor is not necessarily responsible for an injury simply because it occurred on their property.

Classification of Visitors

When determining liability on the part of a property owner/possessor, several factors are taken in to consideration.  A key factor for determining Premises Liability is the visitor’s legal classification, which is generally broken down into three classes with each class having different rights.  Invitees, licensees, and trespassers are classifications of visitors in the State of Alabama.

  • An invitee is someone who is invited onto the property of another, such as a customer in a store or a guest in a hotel. This invitation usually implies that the property owner/possessor has taken reasonable steps to assure the safety of the premises.  An invitee is owed the highest duty of care.
  • licensee is someone who enters the property for his own purpose, or as a social guest, and is present at the consent of the owner/possessor.  As a property owner/possessor, you owe a licensee a duty to exercise reasonable care to prevent injuries from a condition on the land that you knew — or should have known — of at the time of their entry.  A licensee is owed a higher duty of care than a trespasser, but lesser duty of care than an invitee.
  • trespasser is someone who enters the property without the owner/possessor’s permission (either express or implied) for his own reasons — and not for the benefit of the owner/possessor.  A trespasser is owed the lowest duty of care; however, a property owner/possessor has a duty not to willfully injure a trespasser.

Qualifying Conditions for a Law Suit

Once a visitor’s legal classification has been determined, four main conditions must exist to qualify for a Premises Liability suit:

  1. The premises where the accident occurred must be in or contain a dangerous condition.
  2. The dangerous condition must cause an injury.
  3. The parties responsible for the property were aware of the dangerous condition or should be expected to know about it.
  4. The parties responsible for the property must have had a reasonable opportunity to repair the dangerous condition.

Premises Liability claims can be hard to prove under Alabama law and such cases are becoming increasingly difficult to settle or win in Court.  Judges and jurors typically place the burden of proof on the injured party to provide a preponderance of evidence that the property owner/possessor showed neglect, or failed to take some action which led to the injury.  Property owner/possessors who are aware of the basics of Premises Liability law are better positioned to both prevent injury and limit liability under Alabama law.

What You Need to Know

As a property owner, slip-and-fall accidents are not the only types of accidents you need to be aware of.  Remember, accidents can happen anywhere, anytime, and these accidents might be caused by other circumstances, such as:

  • Slippery walking surfaces due to spilled liquids or food, a puddle of motor oil, or standing water, etc.
  • Uneven walking surfaces such as driveways and sidewalks, cracked concrete, torn carpeting, or plant roots
  • Falling through unsafe surfaces, such as old steps or porches
  • Falling material, broken ladders, or hazardous material
  • Drowning, near-drowning causing brain damage, or diving injuries which occur in and around swimming pools
  • Falling branches or trees

 Be proactive and take good measures to protect yourself by taking reasonable steps to assure the safety of your property at all times.  Being proactive, coupled with appropriate homeowners insurance coverage and the assistance of good legal counsel can go a long way toward reducing your exposure to potentially damaging Premises Liability suits.  If you have questions about Premises Liability, please contact Rahmati Law Firm, LLC at (256) 533-2002.

* No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.

Five Common Mistakes of Estate Planning

“Most people don’t plan to fail, they fail to plan.” – John J. Beckley

The idea of death is an unpleasant one and the thought of planning for your future can be overwhelming, so perhaps this is why so many people fail to plan.  Don’t be one of them by avoiding these common mistakes:

1. Failing To Plan

There is a common misperception that estate-planning is only necessary for the “rich”.  You know, “the 1%”?  Whether you own a home or have children, experts say most people should create an estate plan to guarantee their assets go where they want.

If a person in Alabama dies without a valid last will and testament, their assets will be distributed to their heirs by the State under “intestate succession” laws; however, only those assets that would have passed through their will are affected.  Typically this includes only those assets that you own in whole and in your own name.  Many valuable assets don’t go through your will, and will pass to the surviving co-owner or to the beneficiary you designated, whether or not you have a will.  These include, but are not limited to:

  • Life insurance proceeds
  • Funds in a 401(k), IRA or other retirement account
  • Property transferred to a living trust
  • Property you share in joint tenancy

2. Thinking All You Need Is A Last Will And Testament

A last will and testament may indicate who receives what assets upon your death, but whether or not you have a will, your estate will be administered and processed through the legal system, through the probate process, upon your death.  This can be time consuming and expensive for your surviving family members.

On the other hand, if you have a living trust, it eliminates the probate process for the assets titled in the name of the trust.  A few advantages of a living trust include:

  • It does not have to go through the probate process
  • It provides you with control over how your assets are to be distributed
  • It prevents the Courts from controlling your assets if you become incapacitated
  • It remains confidential and does not become a matter of public record

With a living trust, you’re able to name someone, known as the trustee, to manage the trust property for your designated beneficiaries.  While you’re alive, the trustee has a responsibility to manage your property as you have directed.  Upon your death, the trustee should dispose of your estate according to your wishes or manage it for the benefit of your designated beneficiaries.

3. Thinking All You Need Is A Living Trust

Many people assume that establishing a living trust and signing the trust documents means they’re done.  Wrong.  Remember, the trust does not exist unless it holds assets, so it must be funded.  Setting up the trust also requires you to transfer ownership of all the property you wish to place in the trust.  This may include revising title documents in the name of the trust.

Even if you establish a living trust, you should make a last will and testament as well.  Upon your death, your will collects and transfers any additional assets (assets you may have recently acquired or forgotten to transfer) to your trust so that they will be dispersed according to your wishes and avoid the probate process.  Your will also allows you to name a guardian for any minor children.  Your living trust does not.

4. The Old “Out of Sight, Out Of Mind”

All too often people set up their estate plan, but then never look at it again.  Remember, if you have minor children, it’s likely that your estate-planning documents specify who will be their guardian should something happen to you.  Keep in mind that life changes.  Your needs, and the needs of your children, may change too.

Tax laws can also change and people need to look at their estate documents to make sure their trust still works within the current framework.  You should plan to review your trust documents every few years or whenever you have significant life changes such as marriage, divorce or the birth of a child.

As noted in #1, not all assets follow your last will and testament or trust.  Insurance policies and retirement accounts are just a few that will be governed by the beneficiary forms you fill out at the inception of the account or policy.  Again, if you’ve experienced a significant life change, it’s beneficial for you to look at your designated beneficiaries and revise them as needed.

5. Appointing The Wrong Person As Your Trustee

It’s only natural that you’d want to choose someone close to you, maybe a parent, sibling or other family member, to be your trustee; however, they may not be the best person for the job.  “Take into account the person’s age and health and the likelihood of that person being around to administer your estate,” advises Dave Heilich, a CPA and wealth planner at Brown Smith Wallace in St. Louis.  “Obviously, an executor or trustee has to outlive you, so you wouldn’t want to name your brother or sister if they’re your age or older.”

If you decide to appoint a family member, you may want to consider designating a corporate executor or trustee as a successor.  Whoever you choose, make sure it’s someone who you can trust, is honest, and has the time and energy to take on the task of serving as your trustee.  Be sure to let them know where you keep your estate-planning documents and other important papers.

The primary goal of estate-planning is to protect, preserve and manage your estate upon your death or during incapacity.  Throughout life, you work hard to build assets and provide a level of financial security for your loved ones, and you should work just as hard to protect those assets in the future.  If you have questions about estate-planning or require assistance in drafting your estate-planning documents, Rahmati Firm stands ready to assist you. Please call (256) 533-2002 or click here.

*No representation is made that the quality of the legal services to be performed is greater than the quality of legal services performed by other lawyers.