It's important to be informed in your divorce proceeding and to ask your attorney every question possible about your divorce. In particular you should ask your divorce lawyer to explain to you everything that you don't understand. Though it does not frequently become an issue because a good lawyers will know that most seasoned practitioners will not make an issue of it, . . .the "after-acquired property clause" can be a hidden blooper if a substantial asset arises that neither party anticipated and the spouse who didn't acquire the property now wants a portion of it. This is perhaps best explained in the context of this divorce example.
Shannon files an action in the Providence Rhode Island Family Court seeking a divorce from her husband Louis who likes to gamble a bit too much by buying 50 lottery tickets each week. Louis occasionally wins $50 but has never won more than $100.
Shannon and Louis each hire their own attorneys.
Shannon wants a male attorney who focuses his practice in the area of divorce and family law. We meet and she wants to engage me as her attorney to protect her interests in the divorce. Shannon seems pleasant, non-psychotic and fairly reasonable about her expectations for the outcome of her divorce. Shannon doesn't have a significant amount of money so I discount my fee to help her out and I agree to represent her.
Louis calls around and then meets with Attorney Schnoz because he was the one who gave Louis the lowest telephone estimate for an uncontested divorce and Louis expects the matter to be easy and uncontested. Attorney Schnoz generally handles mostly collection cases and evictions but will also takes the occasional uncontested divorce.
Shannon and Louis are very reasonable and with my help and Attorney Schnoz we are able to reach an agreement regarding settlement. There aren't many assets and very little debt so we agree to simply have Shannon and Louis testify about the substance of the agreement and we simply put it on the record before the Judge.
On the hearing date everything goes smoothly but nothing is mentioned about property acquired after the divorce hearing but before the entry of the Final Judgment of Divorce during the testimony. Additionally, nothing is put in the court's temporary order about how how property acquired after the divorce hearing will be handled even though the party remains married until the final decree enters.
Three days before the final decree can enter Louis purchases a lottery ticket. On the first day that the Final Decree of Divorce can enter by law Louis watches the news and finds out that he holds the winning ticket for the Lotto Bucks and has won $3.7 million dollars. He calls Attorney Schnoz to let him know that he won the lottery. Attorney Schnoz realizes that the Final Judgment may enter and runs over to the court to have the Judge sign the Final Decree of Divorce.
Louis is thrilled because he never had this much money in his life. Louis gets a call from Attorney Schnoz who tells him that he is now officially divorced and that he can come in pick up a certified copy of his Final Decree of Divorce. Louis runs over to get his copy and offers to bring a copy to Shannon, supposedly out of courtesy.
As soon as Shannon returns to her apartment he hands her a copy of the Final Divorce Decree and holds up the lottery ticket.
Louis: "You just made the biggest mistake or your life by divorcing me. As of this morning I'm worth a cool 3.7 MILLION DOLLARS. Have a nice life."
Louis leaves and Shannon gets on the phone to let me know what happened. I run out to the court and get a certified copy of the time stamped and entered copy of the Final Divorce Decree.
Two days later Attorney Schoz and I are before the court again on Shannon's Emergency Motion for Restraining Order. Louis is furious. He has a Final Divorce Decree and his position is that she is not entitled to any of it.
My position for Shannon is straight-forward. Shannon needs to have the ticket held by the court and that the funds coming from the ticket should be deposited in to the court registry until the court decides what should be done with them. Attorney Schoz is a bit dumbfounded and argues for Louis that the divorce is final and therefore there is no reason for this.
Judge: Counsel, may I hear your argument as to why your client claims the lottery winnings are his alone.
Attorney Schnoz: Judge, he only has a ticket. Nothing more. What does she want? The $10.00 it cost for half the purchase price of this $20 ticket? If that's the case we'll give her the $10 right now but she certainly isn't entitled to any winnings from it. My client paid for it himself. He picked the numbers and he hasn't even received any monies from it at this time. In fact, this ticket isn't worth anything until it is verified as a winning ticket and they pay out on it which probably won't be for another 45 or 60 days. By that time he will have been divorced from this woman for 2 months after the ticket has matured into an actual payout. The law is fairly clear that an ex-spouse isn't entitled to anything he gets after the divorce. The funds belong to Louis. Shannon as his ex-wife has no entitlement to them.
Judge: Okay. Now Mr. Pearsall let me hear from you. How is it that your client claims she is entitled to any of these monies in light of that.
Attorney Pearsall: Thank you your Honor. I think my brother has missed the point here a bit. This marriage broke down substantially because of her husband's gambling and excessively buying these lottery tickets. He squandered their money on the lottery and my client bore the brunt of that. She finally had to divorce him, in part, because of it.
The husband purchased this ticket a full week before the lottery drawing that revealed he had a winning ticket. When we had the hearing in this case we put the agreement of the parties on the record of the court. Nowhere in that agreement did my client agree that any property acquired by her or her husband up to the time of the Final Decree would not be part of the marital estate.
This man had an attorney, we all knew he continued to buy lottery tickets and there was always the chance that one of those tickets could be a winning ticket. If Attorney Schnoz and his client wanted any winnings by the husband to be exclusively HIS then there should have been something insisted upon in our agreement that any property acquired AFTER the hearing date was solely the property of the person who acquired it. Without that agreement, the ticket became part of the marital estate at the time it was purchased and my client is entitled to half of its value.
In fact, the ticket matured when it was announced as a Winner in the morning on the day the Final Decree of Divorce entered. The husband and his attorney knew of this and rather than filing a new DR-6 Financial Form to disclose to the court and his wife the new information as to this asset, as is required by family court procedure, they presented the Final Divorce Decree and had the court sign it.
The husband then proceeded to throw it in my client's face only hours after the decree had entered as a little dig that she shouldn't have divorced him.
With all due respect to Attorney Schnoz, the ticket is an undisclosed asset of this marriage. Under prevailing case law and procedure, my client was entitled to disclosure and is entitled to make a claim for part of the proceeds of that ticket because the ticket was purchased prior to the entry of the Final Decree of Divorce. Absent any agreement to the contrary it is part of the marital estate and subject to division by this court.
We request that since the Husband is prone to gambling that the ticket be placed in the Registry of the Court to be held until it is paid out and that the monies also be paid into the Registry of the Court until the court determines how they should be divided by the parties.
Judge: Thank you.
Judge: Attorney Schnoz, do you disagree that there was no after-acquired property agreement or that your client purchased the ticket before the Final Decree was entered?
Attorney Schnoz: Well . . . no your Honor but the point is that . . [interrupted by the Judge]. . .
Judge: Thank you Mr. Schnoz. I'm prepared to issue an Order. Since the parties did not have an agreement prohibiting any claim of property acquired by either of them between the hearing date and the entry of the Final Decree of Divorce and since it is conceded that the Husband bought the ticket prior to the entry of the Final Judgment, I find as a matter of law that all Lotto Bucks tickets purchased by the Husband prior to the entry of the Final Divorce Decree are marital assets subject to disclosure and are subject to this court's power of equitable distribution, including any and all proceeds derived from those tickets.
Judge: (continuing) . . . Attorney Schnoz, I am ordering that your client provide that ticket to you and that it be deposited into the Registry of the Court today. I am also ordering that any funds that result from that ticket are also to be deposited into the Court's Registry and the ticket shall only be released to the parties necessary in order to secure the release of the winning funds.
Mr. Pearsall, kindly submit an order to that effect.
Attorney Pearsall: Yes your Honor.
This particular scenario is not typical. However, after-acquired property issues occur frequently. The issue is typically whether a claim should be made for any after acquired property if there is no agreement that the parties shall each simply own their own property that they acquire free and clear of any claim of their soon to be ex-spouse.
If it isn't clear, after-acquired property is property of any kind that one or the other spouse acquires typically after either the date of any property settlement that is agreed to in writing and intended to settle the distribution of the entire marital estate (all the debts and assets) or after the date of the nominal divorce hearing . . . but in both cases before the date and time of the Final Divorce Decree.
Parties often make the mistake of thinking that uncontested divorces are always easy, non-problematic and should not cost much. As you can see, just one issue in this case made a big difference for Shannon. An attorney needs to be prepared to address the same legal issues that occur in a contested divorce matter as those which appear in an uncontested matter. The legal responsibility for the attorney is no less great in an uncontested matter as in a contested matter.
In this case, Attorney Schnoz quoted Louis the lowest rate of all the attorneys he called, yet his price shopping for the lowest rate in this particular case secured him a lawyer that probably lost him 50% of 3.7 MILLION DOLLARS. Depending upon his temperament in this case, Louis might consider whether he can sue Attorney Schnoz for legal malpractice for not anticipating that an after-acquired property clause should have been included for his protection in his divorce settlement. However, given the track record Louis had with winning tickets, the chances that his claim would prevail against Attorney Schnoz might be minimal.
Do you really know your rights regarding marital assets?
Would you have seen this issue coming?
Uncontested simply means you are not fighting each other on every little thing.
It does not mean that you don't have legal issues! The two are often confused.
My business isn't divorce. It's doing whatever I can to get you successfully to a brighter tomorrow!