Why The Date of Your Exit May Cost You Money…
In October, celebrity gossip powerhouse TMZ reported that singer Ben Harper had filed for divorce from his wife, actress Laura Dern. According to the divorce petition (which was filed on October 8, 2010) Harper claimed that the parties had separated on January 1, 2010. Last week, however, TMZ reported that Harper amended his petition to list the parties’ separation date as July 1, 2010. The tabloids jumped all over Harper’s amendment, claiming that the change was motivated by money. Maybe it is. Maybe it is not.
Having never practiced in California, I cannot speculate about the importance (or lack thereof) of listing a separation date in a divorce petition. I imagine it must have some significance, otherwise why would an attorney list it. But, beyond that, it is anyone’s guess.
Had the Harper-Dern case been filed in Minnesota and had the parties been subject to Minnesota law, I can think of only one reason why a separation date would matter – valuing the marital estate.
Under Minnesota law, all property acquired by either spouse before the valuation date is presumed to be marital property. This is true regardless of how an asset is titled. Marital property is required to be fairly and equitably divided between the parties at the time of a divorce. By contrast, nonmarital property, which includes property acquired by a spouse after the valuation date, is presumed to be that spouse’s individual property and not subject to division. In other words, the time property is acquired determines its character (marital vs. nonmarital) and its character determines its divisibility.
Before we can fully understand the importance of the separation date, however, there is one more piece of the puzzle we need to mention – how courts determine the valuation date. In Minnesota, divorce law presumes that the valuation date will be the date of the initially scheduled prehearing conference. However, the law specifically allows people to argue that a different date is more fair or equitable. In practice, this means that if the parties have been separated for a long time before starting a divorce, it might be fairer to change the valuation date to the date of separation. Thus, if the valuation date were moved and if a party were to acquire property after that date, the newly acquired property would not be divided with the person’s spouse.
What does this mean? For starters, it means that the separation date can be important. It also means that the separation date influences other decisions. The date can influence when the court values marital property, which can influence whether property needs to be divided. It’s the butterfly effect. Changing the separation date can change the property division.
Can we apply this analysis to the Harper-Dern case? Can we conclude that Harper’s changing of the separation date was motivated by his desire to get more money? Probably not. In addition to the differences which exist between Minnesota and California law, it’s important to remember that Harper switched the date the other way. He changed the separation date from January 1, 2010 to July 1, 2010, which actually created more marriage, not less. It’s the opposite of what people try to do to avoid dividing money.
Maybe Harper was just correcting a mistake. Maybe this really is not a story after all.
Robert W. Gadtke is a Minneapolis divorce attorney. His practice focuses on helping clients protect their children and get a fair financial settlement. His ebook, 10 Top Divorce Mistakes and How to Avoid Them, can be found on his website. He also maintains a blog devoted to divorce and family law. www.gadtke.com