Treatment of Business Interests in Property Division

October 7, 2014,

It may come as a surprise to some, but a divorcing spouse's financial or ownership interest in a business may be classified as "marital property" by a court when dividing property in a divorce. As an equitable distribution state, Mississippi courts are required to divide marital assets fairly, or "equitably," between divorcing spouses. Marital assets may include any economic or ownership interest in a business, especially such interests in a closely-held business. Closely-held businesses often include family businesses or other small businesses whereby a spouse is a sole proprietor, shareholder or stockholder, partner, or otherwise owns a financial or ownership interest in the business. Like any other property owned by a spouse in a divorce, in terms of property division, Mississippi courts first classify a spouse's business interest as marital property, separate property, or a mixed asset (part marital, part separate property). valuation.jpg

A business interest acquired by a spouse during the marriage or purchased with marital funds may be considered marital property. MacDonald v. MacDonald, 698 So. 2d 1079, 1083-84 (Miss. 1997). For example, where a husband starts a new business, joins a partnership, or even buys stock in an already existing business during the marriage, the husband's interest in any of those situations will likely be classified as marital property, and it may be subject to equitable distribution in a divorce. On the other hand, a business interest acquired and owned by a spouse prior to the marriage will generally be classified as separate property. In addition to business interests owned prior to the marriage, any business interest acquired by gift or inheritance during the marriage may be classified as separate property. McKissack v. McKissack, 45 So. 3d 716, 718 (Miss. Ct. App. 2010). But remember, even separate property--including gifts and inheritance--may be classified, or converted into, marital property if it is commingled or designated for familial use during the marriage. Lastly, a business interest may be classified as a mixed asset--a mixture of separate and marital property. The most common example of when a business interest may be classified as mixed property is where the business interest owned prior to the marriage (otherwise classified as separate property) appreciates--or gains financial value--during the marriage. As a result, the "[a]ppreciation of the value of any non-marital asset [separate property] may be taken into account to arrive at a fair division to the extent the non-titled spouse had made a contribution toward the appreciation of value" or where the owning-spouse's efforts during the marriage caused or contributed to the business interest's appreciated value. Carrow v. Carrow, 642 So.2d 901, 907 (Miss. 1994). In such a case, the appreciated value of a business interest can be calculated by subtracting the value of the business interest at the time of the marriage from its current value.

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What's Yours May Be Not Be "Yours" in a Divorce: Separate Property vs. Marital Property

October 2, 2014,

In the wake of a divorce, it is not uncommon for spouses to start claiming what is "their" individual property. However, simply "claiming" property as your own does not make it so. Property that a divorcing spouse thinks he or she independently owns--even pre-marital property--may very well be "marital" property subject to property division in Mississippi. In Mississippi divorce cases, one of the key determinations to be made is whether the property owned by the parties is "separate" property or "marital" property.

his hers ours.jpgAt common law, states treated property in a divorce as either "titled property" or "community property." "Titled property" (or "separate property") states maintained that property titled to, or legally owned by, an individual spouse, separate and apart from the marriage, was exempt from property division in a divorce. As a result, the titled spouse was able to wholly retain the property after the divorce. On the other hand, "community property" states treated all property owned by both spouses as part of the "community" or marriage. Consequently, regardless of which spouse held title to the property, the property owned by both spouses in community property states was generally subject to equal (50/50) division in a divorce. These two property division concepts are still prevalent in many states today. But, Mississippi is neither a true "titled property" state nor a true "community property" state. Instead, as mentioned in one of my early posts, Mississippi is known as an "equitable distribution" state, which could be seen as a mixture of the two property division doctrines.

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Getting Back on Your Feet: Rehabilitative Alimony in Mississippi

September 23, 2014,

As I explained in an earlier post, alimony is still alive in Mississippi, and it is definitely something a person should consider when contemplating a divorce. Again, when people hear the word "alimony" they typically think of permanent alimony. But, what many people do not know is that Mississippi recognizes temporary spousal support as well, such as rehabilitative alimony.

Mississippi courts have recognized rehabilitative alimony, also known as "transitional" or "time-limited" alimony, since 1995. As the Mississippi Supreme Court recently noted, rehabilitative alimony "is an equitable mechanism which allows a party needing assistance to become self-supporting without becoming destitute in the interim." Pierce v. Pierce, 132 So. 3d 553, 565 (Miss. 2014) (quoting Hubbard v. Hubbard, 656 So. 2d 124, 130 (Miss.1995)). In other words, rehabilitative alimony is temporary, transitional monetary support awarded to a needy spouse while he or she attempts to re-enter the workforce and obtain a viable income to support himself or herself following the divorce. As a result, in many instances, rehabilitative alimony is available to a spouse who put his or her career on hold while taking care of the marital home; for example, the stay-at-home spouse. Lauro v. Lauro, 847 So. 2d 843, 849 (Miss. 2003). However, in some cases, rehabilitative alimony has been awarded to a divorced spouse who maintained a full-time job during and after the marriage. See Brady v. Brady, 14 So. 3d 823, 826 (Miss. Ct. App. 2009).

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Alimony is Still Alive in Mississippi

September 16, 2014,

When I talk with clients about divorce, I have heard many say "I understand there is no alimony in Mississippi." Many of these people show up in my office seeking help with a divorce, and unfortunately, they are mistaken because alimony is still alive and well in Mississippi. In this regards, one of the most stressful issues that many of my clients face is the potential of having to pay alimony to their spouse in the event of a divorce. Many clients simply do not understand why they have to pay money to support a person to which they are no longer married. As a result, alimony is often both a confusing and frustrating issue in many divorce cases.

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Alimony, also known as spousal support, has been a concept embraced by Mississippi law since 1848. DEBORAH BELL, BELL ON MISSISSIPPI FAMILY LAW § 9.01[5] (2d ed. 2011). The purpose of alimony is to provide support for a financially-dependent spouse, albeit the divorcing wife or husband. Mississippi law maintains a strong public policy in favor of providing financial support to divorcing spouses who would otherwise be at risk of becoming destitute--or those who are seriously at risk of not having the financial means to provide for basic living necessities. So, to be clear, the purpose of alimony is not to provide financial support to a divorcing spouse so that the spouse may maintain a comparable standard of living that existed during the marriage, but to provide monetary support to avoid placing persons in poverty following a divorce. That being said, there are four types of alimony recognized in Mississippi: (1) permanent alimony, (2) lump sum or "settlement" alimony, (3) rehabilitative alimony, and (4) reimbursement alimony. See BELL ON MISSISSIPPI FAMILY LAW § 9.02. The most prominent form of alimony is permanent alimony.

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Condoning Marital Misconduct Could Bar Divorce in Mississippi

September 9, 2014,

I routinely deal with cases involving a spouse who wants a divorce because he or she learned that the other spouse cheated or committed some other type of marital misconduct. Often times, when a client hires me to help with a fault-based divorce, especially where the ground for divorce is adultery, one of the first questions I ask my client is: Did you forgive your spouse? A "yes" to this question can certainly complicate an otherwise clear-cut divorce. In Mississippi, forgiving--or condoning--a spouse's past marital transgressions may legally bar a complaining-spouse's right to a divorce. As a result, condonation is one of most often used defenses to fault-based divorce in Mississippi. images (1).jpg

Condonation occurs when a spouse voluntarily forgives the other spouse for committing some sort of marital misconduct. Where a spouse forgives the other's misconduct, there is an unspoken promise that such misconduct will not recur. So even if the complaining-spouse condones or grants forgiveness for the other spouse's misconduct, such forgiveness is conditioned on the offending-spouse's continued good behavior. For example, if a spouse forgives the other for committing adultery, then the other spouse either continues the extramarital affair or commits adultery again, then the prior condonation or forgiveness for the first instance of adultery would likely be invalid. More so, it is important to note that condonation is most often used as a defense against divorce based on grounds of adultery whereby the offending-spouse claims that the complaining-spouse forgave him or her for an extramarital affair. However, the condonation defense is not limited to just adultery. For example, the Mississippi Court of Appeals in Smith held that the defendant's wife did not condone his excessive gambling habit simply by accompanying him to the casino where he regularly gambled. Smith v. Smith, 90 So. 3d 1259, 1266 (Miss. Ct. App. 2011).

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Antenuptial Knowledge of a Condition Existing Prior to Marriage May Bar Divorce in Mississippi

September 4, 2014,

In terms of divorce defenses under Mississippi law, "antenuptial knowledge" may simply be defined as a complaining-spouse's (the spouse filing for divorce) pre-marital knowledge of the defendant-spouse's pre-existing bad habits, condition, or other marital impediment that now is alleged to present a cause for divorce. For a defendant-spouse to rely on the defense of antenuptial knowledge, there must be evidence that the complaining-spouse was fully aware of the defendant's alleged pre-marital conduct before entering into the marriage, or evidence showing that the complaining-spouse had such reliable information that a reasonable person would have known about the defendant's particular pre-marital conduct, which is the alleged ground for divorce. See N. SHELTON HAND, MISSISSIPPI DIVORCE, ALIMONY, AND CHILD CUSTODY § 5:13 (2014). Thus, actual or constructive antenuptial knowledge of a defendant-spouse's impediment giving rise to the divorce is sufficient to establish a valid defense against the divorce in Mississippi.

Since 1959, there seems to be no significant case addressing the antenuptial knowledge defense by the Mississippi Supreme Court or Court of Appeals. The most notable case where the Mississippi Supreme Court directly and substantively addressed the antenuptial knowledge defense to divorce was in Kincaid v. Kincaid. In that case, the wife filed for divorce asserting that her husband was a habitual drunkard. Kincaid v. Kincaid, 42 So. 2d 108, 109 (Miss. 1949); see MS § 93-5-1 (5) (2014). Seeking to prevent the divorce, the husband in the case claimed that the wife knew or should have known of his habitual drunkenness before the marriage and therefore should not be able to complain about it now. Accordingly, the Mississippi Supreme Court explained that the crucial issue in the case was whether the husband sufficiently established that the wife knew or had good reason to know of the husband's habitual drunkenness at the time of, or before, the marriage. Id. In assessing Mississippi law, as one commentator has stated, the Kincaid court "suggested that premarital knowledge of [] conditions such as habitual drunkenness, drug use, imprisonment or impotency may bar divorce." DEBORAH BELL, BELL ON MISSISSIPPI FAMILY LAW § 4.03[1] (2d. ed. 2011). Ultimately, the Kincaid court held that there was not sufficient evidence to establish the wife's antenuptial knowledge of the husband's habitual drunkenness in order to bar a divorce because "[a]t the most, she knew only that he was an occasional and moderate social drinker [, not] an habitual drunkard before marriage . . . ." Id. at 109-110.

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A Way Out: Habitual Cruel and Inhuman Treatment as Grounds for Divorce in Mississippi

August 28, 2014,

When a client seeks my counsel about divorce in Mississippi and I ask them why he or she wants a divorce, in several cases, the response is surprisingly consistent: "We argue all the time" or "He or she is mean and rude to me." During the first conversation I have with these clients I typically explain that habitual cruel and inhuman treatment is a ground for a divorce in Mississippi. Undoubtedly, a spouse's cruel, demeaning conduct can place a significant strain on a marriage. Marriage does not require a spouse to endure the physical or emotional torture resulting from a spouse's habitual cruel and inhuman conduct. Like I tell many of my clients, Mississippi law may provide an innocent spouse a way out.

As mentioned in an earlier post, habitual cruel and inhuman treatment is a ground for contested, fault-based divorce in Mississippi. Like all other fault-based divorce grounds, habitual cruel and inhuman treatment must be alleged with specificity, corroborated by sufficient evidence, and proven by a preponderance of the evidence. Shavers v. Shavers, 982 So. 2d 397, 403 (Miss. 2008); Daigle v. Daigle, 626 So. 2d 140, 144 (Miss. 1993). The Mississippi Supreme Court has explained that habitual cruel and inhuman treatment exists only where there is a

continuous course of conduct on the part of the offending spouse which was so unkind, unfeeling or brutal as to endanger, or put one in reasonable apprehension of danger to life, limb or health, and further, such conduct must be habitual, that is, done often enough or so continuously that it may reasonably be said to be a permanent condition.
Holladay v. Holladay, 776 So. 2d 662, 676 (Miss. 2000) (citing Robison v. Robison, 722 So. 2d 601, 603 (Miss. 1998)). And to be clear, evidence of physical violence or threat of physical violence is not necessary, but is sufficient, to prove habitual cruel and inhuman treatment. Bodne v. King, 835 So. 2d 52, 58 (Miss. 2003).

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Equal Fault: Recrimination as a Defense Against Fault-Based Divorce

August 25, 2014,

One of the things that I have learned from my experience as a divorce attorney in Mississippi is that divorce is defendable. Some clients that retain my services are still in love with their spouse and genuinely want their marriage to work out and do not want a divorce, and they are willing to "fight" for their marriage or defend against a divorce. When addressing the concerns of the clients that don't want a divorce, I generally inform them that there are several ways to legally defend against divorce because, in essence, divorce is nothing more than a lawsuit. And like any lawsuit, there are defenses available to the defendant-spouse in a divorce action in Mississippi.

It is important to remember that the spouse seeking a divorce bears the burden alleging certain marital misconduct committed by the defendant-spouse and proving any alleged grounds for divorce with sufficient evidence. Lindsey v. Lindsey, 818 So. 2d 1191, 1194 (Miss. 2002). But, the defendant-spouse must specifically raise any and all affirmative defenses available in answering the divorce complaint. One of the most commonly raised defenses to fault-based divorce in Mississippi is recrimination.

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Equitable Distribution & Property Division in Mississippi

August 12, 2014,

Along with custody disputes, the division of marital property is often a source of contention for many couples seeking divorce. Depending on the duration of the marriage, the amount of property acquired will fluctuate. But generally, the longer the marriage, the more property or "stuff" is acquired. One of the most common questions I get when a client comes to me seeking a divorce is: "What's going to happen with all my stuff?" The simple answer is whatever is classified as marital property will be "equitably" divided, while non-marital property is treated as separate property belonging to the titled spouse.

Since 1994, in divorce cases, Mississippi chancery courts have applied the doctrine of equitable distribution when dividing marital property. See Ferguson v. Ferguson, 639 So. 2d 921 (Miss. 1994). Thus, when it comes to property division, Mississippi is not a "community-property" state whereby all of the divorcing spouses' assets, regardless of whether they were acquired during the marriage or not, are divided equally (50/50) upon divorce. Carter v. Carter, 98 So. 3d 1109, 1113 (Miss. Ct. App. 2012). Instead, Mississippi is what is called an "equitable distribution" state.

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The Two Paths of Divorce in Mississippi

August 5, 2014,

Over the past decade, I have assisted hundreds of people with divorce and divorce-related issues in Mississippi. As we have briefly discussed in previous posts, there are two ways to obtain a divorce in the State of Mississippi: (1) an Irreconcilable Differences Divorce ("ID Divorce") and (2) a contested or "Fault Based" divorce. While divorce is never without stress and, honestly, there really is no "easy" way to obtain a divorce in Mississippi, an ID Divorce, also known as "agreed" or no-fault divorce, may be considered the "easier" way to obtain a divorce here in this State.

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Contested Divorce in Mississippi

A contested divorce is what most people think of when they hear the term "divorce." In this type of divorce, one or both of the parties allege that the other spouse committed some type of marital "misconduct" during the marriage that rises to the level of a "fault" ground for divorce. Since 1932, there have been twelve (12) grounds for divorce in Mississippi, with the most commonly used ones including Adultery, Habitual Cruel and Inhuman Treatment, Habitual Drunkenness, Habitual Drug Use, and Desertion. When a party proves his or her ground for divorce, the party may be granted a divorce by the court even if there is no agreement between spouses to be divorced. However, a contested divorce in Mississippi still maintains strict requirements of proof, corroboration, and defenses.

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Simply a Piece of a Larger Pie: The Weight of Adultery in Child Custody Determinations

July 31, 2014,

If you are involved in a child custody dispute, it is important to be aware of what Mississippi courts look at when making custody determinations. One important question that often surfaces is whether adultery can disqualify a parent from obtaining custody. Adultery is a factor that can play a part in child custody determinations, but it is not necessarily the deciding factor; and the extent to which adultery affects a custody determination depends on the circumstances. Most importantly, in a child custody dispute between divorcing parents, Mississippi courts consistently award custody of the child (or children) to the parent that will better serve the "best interests and welfare" of the child. This "best interests of the child" standard serves as a guiding light for the courts in all custody cases in Mississippi. Riley v. Doerner, 677 So. 2d 740, 744 (Miss. 1996) (citing Sellers v. Sellers, 638 So.2d 481, 485 (Miss.1994)).

Courts will usually first look at several legal presumptions that have been developed over the years to further the "best interests of the child" standard. Such presumptions include the presumption against a violent parent having custody of the child, or the presumption that natural parents should be favored over an adoptive parent. Beyond these legal presumptions, courts will look at the often-used Albright factors, named after a 1983 Mississippi case. See Albright v. Albright, 437 So. 2d 1003 (Miss. 1983). A brief overview of these Albright factors can be found here.

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Shackin' Up & The Legal Effects of Cohabitation in Mississippi

July 29, 2014,

Cohabitation, or the act of an unmarried couple living together, has become a prevalent social trend over the last 40 years. In fact, today, cohabitation has become a precursor to marriage. Many people decided to "test the waters" before marriage, and cohabitation is probably the most frequent method of doing so. In some ways, the saying that "you do not really know someone until you live with them" rings more true now than ever. But, in Mississippi, there are both criminal and civil legal effects of cohabitation that everyone should be aware of.

Criminal Cohabitation

It goes without saying, but Mississippi--being positioned in the Bible Belt of the United States--maintains a strong moral code and promotes family values. And believe it or not, cohabiting with another person is technically illegal in Mississippi. But fear not, the Mississippi Supreme Court has recognized that the anti-cohabitation statute is ignored with great frequency and criminal cohabitation virtually goes unpunished today. Davis v. Davis, 643 So. 2d 931, 935 (Miss.1994). Nevertheless, cohabitation is still considered a "crime against public morals and decency." Id.

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Gone with the Wind: Desertion and Divorce in Mississippi

July 24, 2014,

Marriage is a beautiful concept that many people are willing to embrace. But, unfortunately, the struggles of marriage become a concept that some people realize that they cannot, or will not, endure. When marriage gets tough, some spouses initiate their "fight" receptors and seek to endure the struggles while others seek "flight" from the marriage. Fleeing marriage and a spouse is not uncommon, and in Mississippi, desertion--or abandonment by one spouse-- may be a ground for divorce.

Under Mississippi law, "[w]illful, continued and obstinate desertion for the space of one (1) year" is grounds for divorce. MS § 93-5-1 (2014). In other words, a spouse's intentional and continued abandonment of the other (innocent) spouse for one year or longer, without interruption by reconciliation, constitutes desertion. But, if the innocent spouse "provok[ed] the defendant [offending spouse] into the acts which constitute the alleged ground[ ] for divorce," then a divorce will not be granted. Brown v. Brown, 2012-CA-00672-COA (Miss. Ct. App. Dec. 3, 2013), reh'g denied (Apr. 15, 2014) (citing Ammons v. Ammons, 144 Miss. 314, 318, 109 So. 795, 795 (1926)). Thus, the alleged offending spouse "may defend against a claim of desertion by 'set[ting] up any misconduct of [the] plaintiff which justified the separation[.]'" Id. Further, to be clear, "desertion is an act of the offending spouse in relation to the marital status and not the place where the parties reside or their domicile." N. SHELTON HAND, MISSISSIPPI DIVORCE, ALIMONY, AND CHILD CUSTODY § 4:9 (2013). Accordingly, desertion can occur even if the offending spouse remains within the marital home but is intentionally detached from the other spouse, including physical and emotional detachment.

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Sipping the Syrup Too Much: Habitual Drunkenness and Divorce in Mississippi

July 22, 2014,

Here in Mississippi, there is nothing like watching a good football game and drinking a cold beer with friends and family. Recreational drinking--and football of course--is a stapled pastime in our country. But for some, the pastime of alcohol consumption can become a serious problem. Just like a drug addiction, alcohol abuse can have a substantial negative impact on personal relationships, including marriages. In Mississippi, habitual drunkenness is one of twelve fault-based grounds for divorce. MS § 93-5-1 (2014).

Habitual drunkenness is a rarely used ground for divorce, and there is limited case law on what exactly constitutes "habitual drunkenness." Nevertheless, to succeed on a habitual drunkenness claim, a spouse must "prove that the defendant was habitually, or frequently, drunk, that the drinking adversely affected the marriage, and the habit continued at the divorce trial." BELL, BELL ON MISSISSIPPI FAMILY LAW § 4.02[6](2010) (analogizing habitual drunkenness grounds to habitual drug use grounds); see Ladner v. Ladner, 436 So. 2d 1366, 1375 (Miss. 1983) (daily use over four years was sufficient frequency to show abuse), and Smithson v. Smithson, 74 So. 149, 151 (Miss. 1917) (use must be ongoing at time of trial)).

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How High: Marijuana Use as Grounds for Divorce in Mississippi

July 17, 2014,

Habitual and excessive drug use--including excessive marijuana use--is one of twelve grounds for fault-based divorce in Mississippi. Under Mississippi law, "[d]ivorces from the bonds of matrimony may be decreed to the injured party for . . . [h]abitual and excessive use of opium, morphine or other like drug." MS § 93-5-1 (2014). A person seeking a divorce based on a spouse's habitual and excessive drug use must show that their spouse's use of drugs is (1) habitual and frequent, (2) excessive and uncontrollable, and (3) was of morphine, opium or drugs with the similar effect as morphine or opium. Lawson v. Lawson, 821 So. 2d 142, 145 (Miss. Ct. App. 2002). All three of these elements must be shown for a Chancellor to grant a divorce. In order to show "habitual drug use," a person must show that their spouse customarily and frequently used drugs; one time, or occasional, drug use is not sufficient. Ladner v. Ladner, 436 So. 2d 1366, 1374 (Miss. 1983). Essentially, the spouse accused of drug use must be characterized as a drug abuser, and "must be so addicted to the use of drugs that he cannot control his appetite for drugs whenever the opportunity to obtain drugs is present." Id.

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