A 34-year Marriage’s Assets, Divided Fairly for Both Parties

by | Oct 24, 2023 | Case Study | 0 comments

Memorandum of Understanding for Janice Doe and Jason Doe

A) Background:

Janice and Jason have been married 34 years. They would like to reach a post-nuptial, separation agreement, delineating how income and expenses will handled as well as the division of property. Separating has impacted Jason to the point that he would like to liquidate the business interests, which currently are not liquid. The reason for the financial analysis and marital agreement is to formally orchestrate how income and expenses will be handled as well as parameters around property so that both parties are operating on the same plane and under the same rules and parameters.

B) Income and Expenses:

All of Janice’s and Jason’s income should be deposited into a single joint checking account that is owned by both and transparent to both. Income includes any wages, K-1 distributions, dividends, capital gains, or any source of money that the IRS would consider taxable income. Expenses include food, entertainment, costs associated with maintaining real estate owned personally by the parties, medical expenses, automobile, travel, insurance, utilities, and any other expense generated in their normal day to day and customary living. The joint checking account that receives all income derived by the parties will also serve as the conduit that pays all of the expenses. I strongly suggest that a stipend for each party also be deducted from the joint checking account each month and deposited into a separate account in order to have discretionary and non-scrutinized spending. Alternatively, I suggest distributing from a joint savings or investment account an amount uniform for each that will become considered non-marital and which can be used at the discretion of the parties. I also suggest that there be a stipulation that neither party will withdraw from the joint checking account more than $7000 without the written consent of the other.

C) Real Property:

The real property owned by the parties includes the following: Realty Company, LLC, downtown garage, Nameredacted property, Location hotel group, Exotic property, and the Balcony property. The parties will either agree to a fair net market value for one or more of the properties and divide ownership of the property(ies) through an offset, or alternatively, the property(ies) will be sold and the net proceeds will be distributed equally on an as if and when basis. The properties will remain marital until liquidated or exchanged between the parties.

D) Personal Property:

The personal property consists of Bank A savings, A&B Bank savings, Buddy’s Rental, a brokerage account, and an annuity with Annuity Co., as well as a Simple IRA with Y&Z, a Joe Shmoe IRA for Jason, and an National Money IRA for Janice. I suggest that Jason maintain Janice as primary beneficiary of the Annuity Co. annuity and that any withdrawal or distribution from the annuity be split 50/50 with Janice. Similarly, the other personal assets will be divided on a 50/50 basis if liquidated or exchanged between the parties. However, these assets will remain marital and neither party will liquidate all or any portion of them without mutual written consent.

E) Life Insurance:

From either the joint checking account or joint investment accounts, premiums should be paid for both the Commonwealth Life and Annuity and the Shenandoah life insurance policies on Jason’s life. These policies shall be maintained indefinitely with the proviso that when either Y&Z Construction Services or Sizzle Electric is sold, then if one party wishes to sell or otherwise dispose of the policy, that party will be credited with the net cash surrender party from the other from an offset of other assets that will be exchanged and deemed non-marital once the exchange is completed.

F) Business Interests:

As stated above, all income from Y&Z Construction Services, Sizzle Electric, IGS, or any other business interest owned prior to the execution of a marital agreement will be treated as marital income and be divided on a net after-tax basis of 50/50. This includes net after-tax income or gains resulting from the sale of any of these business interests on an as if and when basis. The net after-tax proceeds resulting from the sale of any of the business interests shall be shared on a 50/50 basis, and once distributed will no longer be considered marital property.

G) Debts:

No debt has been identified to me. However, to the extent to which there is any marital debt, it will be shared on a 50/50 basis.

H) Clarifications:

This memorandum of understanding reflects my understanding of terms that should be mutually acceptable by the parties. This memorandum of understanding is not a contract or in any way binding on the parties. To become binding, the terms need to be memorialized into a marital agreement. I am happy to refer and coordinate with one of my family law colleagues who can facilitate the contract. Once a contract is executed, the parties will operate under a legal framework that will apply if they remain legally married but living apart or if they seek to incorporate the agreement into a formal dissolution of the marriage.

Respectfully submitted,
Greg Gann