Albuquerque Divorce Lawyer Blog

A variety of complicated emotional and legal issues arise when a person dies. And those issues get even more complicated when the deceased is involved in a pending divorce action. Does one party's death end the divorce proceeding? Does the surviving spouse serve as personal representative of the deceased spouse's estate? How does the Probate Code (the body of laws governing the estate of a deceased person) interact with the statues governing Domestic Affairs? The New Mexico Court of Appeals addressed these questions in two 2009 cases.

These questions are very important in a divorce action which is after all a dissolution of marriage. A dissolution of marriage means a division of property and debt. All community property and debt must be divided according to the law. It also means that the separate property and debt must be identified and divided as such. The division of property and debt has significant consequences for the parties. The division may also raise claims by creditors against the community property by creditors including mortgage companies, credit card companies, and even the IRS. As such, the fact that divorce legally survives the death of one of the parties is no trivial matter.

In Karpien v. Karpien, a case that arose in Sandoval County, the wife died during the parties' divorce proceeding which is commenced upon filing the Petition for Dissolution of Marriage. The district court appointed the wife's parents as the personal representatives of her estate (the personal representative is the party in charge of distributing the assets and addressing the outstanding obligations of a deceased person). The husband objected to the appointment of the wife's parents and argued that the wife's death essentially ended the divorce proceeding and that he was entitled to his inheritance as the surviving spouse under the Probate Code. The Court of Appeals disagreed with the husband and ruled that, upon the death of a spouse during a divorce proceeding, the divorce proceeding continues and the personal representative is charged with representing the interests of the deceased spouse.

But what if the will of the deceased spouse appoints the surviving spouse as personal representative? Just this situation arose in a case out of Albuquerque known as Oldham v. Oldham, in which the husband died during a divorce proceeding. The husband's will appointed his wife as the personal representative of his estate, which would have meant that the wife was charged with representing the husband's interest against herself in the divorce proceeding. The Court of Appeals overturned that appointment and ruled that such a situation created an inherent conflict of interest on the part of the personal representative, who in this case was the opposing party in the divorce action. The Court of Appeals sent the case back to the district court with instructions that the district court appoint another appropriate person to serve as the personal representative so that the divorce proceeding could be concluded.

When a family member dies, it is always important to consult an attorney about the probate process. And when that death occurs during a divorce, it becomes even more important to consult an attorney to make sure that all parties involved are compliant with both the Probate Code and the Domestic Relations statutes.

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With few exceptions, the New Mexico Courts treat all debts incurred during a marriage, by either or both spouses, as community debt, which means that each spouse is equally responsible for the debt.

An important part of a divorce proceeding is a determination of which spouse will pay what debt after the spouses are divorced. After the spouses agree on, or the Court decides, who will pay each community debt, the Court enters a final order adopting that agreement or determination, which becomes binding on the spouses. However, that order is not binding on creditors that may be trying to collect payment of a community debt.

This limitation to the power of a divorce order is especially true when it comes to the Internal Revenue Service because a state court order is not binding on the federal government. During a marriage, when one or both spouses fail to pay federal taxes, the IRS has the power to collect those taxes for either or both spouses. The IRS may file a federal tax lien against any community property owned by the spouses, and is entitled to file a lien against any separate property owned by the debtor spouse. The IRS may choose to levy the wages or tax returns of either spouse.

Further, in New Mexico, the IRS can levy a spouse's 50% interest in community property for debts that were incurred before the marriage. The issue of federal taxes can severely complicate the property and debt division in a divorce proceeding. Spouses that are considering divorce and have outstanding tax issues should contact an attorney in order to avoid serious penalties.

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The general rule in the state of the New Mexico is that all debt incurred during a marriage becomes community debt, which means that both spouses are equally responsible for the debt. This is true even when one spouse creates a debt without the other spouse's knowledge, although there are some narrow exceptions to that rule.

Thus, as part of a divorce proceeding, both parties are required to identify all debts incurred during the marriage. Since these debts are most often community debt, the parties then need to decide how the debt will be divided between them. Essentially, each spouse is responsible for 50% of the debt unless the debt is divided pro rata based upon income, or some other way as agreed upon by the parties. The spouses (or their attorneys) must enter into a marital settlement agreement that identifies which spouse is going to take responsibility for which debt after the divorce is completed.

The parties' agreement with respect to the division of debt is then adopted by the Court in an order dissolving the marriage and adopting the Marital Settlement Agreement as an order of the court. The Second Judicial District Court in Albuquerque typically calls this order a Final Decree, but the name given by Courts around the state may vary. Whatever the title, the Court's final order is binding on the spouses and imposes a duty on each spouse to pay the debts that each agreed to pay.

However, problems often arise after a divorce is completed when one spouse quits paying a community debt that he or she agreed to pay as part of the divorce settlement. Even though the Final Decree is binding on divorcing parties, it is NOT binding on creditors seeking to collect a debt. This means that even after a divorce, a creditor may file an action against both spouses in an attempt to collect what was once a community debt. The collection is based upon joint and several liability for the community debt.

As a result, it is not infrequent that creditors go after one spouse for the debt assigned to the other in the Marital Settlement Agreement. Creditors are often extremely aggressive and unforgiving in their collection efforts. The law is unfortunately on their side. Any debt incurred during the marriage is arguably a community debt with respect to the parties. There are some exceptions such as gambling debts.

If you are considering divorce and have community debt, you should consider consulting an attorney to ensure that your marital settlement agreement clearly assigns that debt. And if you are being contacted by creditors for a debt assigned to your former spouse, you should contact an attorney immediately to discuss the enforcement of the order against your former spouse. Though you have few defenses against the creditor, you do have rights against your former spouse including orders of contempt, attorney fees and costs.

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Mediation is a relatively informal process in which a neutral third party facilitates communication between the parties to a divorce action or custody dispute, the goal being that the parties will resolve their issues themselves rather than having a judge decide those issues for them. A mediation is also often called a settlement facilitation and in several judicial districts around New Mexico, including the Second Judicial District in Albuquerque, there are services associated with the courts that can provide a mediation/settlement facilitation for little or no cost to the parties.

Often in a very contentious or complicated cases, the judge will order the parties to mediation/settlement facilitation in order to see if they can make some headway toward resolving their issues outside the Court. The mediation process is confidential and the rules of civil procedure prevent offers made during mediation from being used as evidence before the Court. Therefore, meditation/settlement facilitation can allow parties to freely discuss possible resolutions of their issues.

Child Custody Mediation is provided year-round at low to no cost depending on the income of the parties through the Court Clinic in Albuquerque's Second Judicial District Court. Settlement facilitation is broader in scope that child custody mediation. Settlement facilitation addresses all aspects of the divorce including the division of property and debt, the division of retirement accounts, the division of the community residence, and alimony, child support, and child custody. Divorce, custody and family law settlement facilitation is provided for free to the parties once per year during Settlement Week at the Second Judicial District Courthouse.

Parties can also arrange for their own mediation; most judicial districts around the state can provide a list of mediators in the area. The people, who act as mediators do not have to be attorneys, but they should be trained in the mediation process and, for maximum effectiveness, should also be familiar with family law issues.

The product of a successful mediation is usually a written agreement. This agreement that is often hand-written will be drafted into a Martial Settlement Agreement, which will then be submitted to the Court and incorporated in the final divorce decree. Thus, while parties do not have to be represented by counsel during the mediation process, a party should strongly consider having an attorney present because the decisions made at a mediation/settlement facilitation can have a serious impact on the property and custody rights at issue in a divorce proceeding.

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If alimony is an issue in your case, there are numerous options available to negotiate and satisfy the alimony obligation. Most of the time, alimony will be negotiated without the necessity of a trial. It should be pretty clear whether your case is an alimony case. If your case is an alimony case, then negotiation and settlement of this issue will likely be preferable to any outcomes you can achieve in a very unpredictable divorce trial.

Should the case proceed to trial, the Court will consider the length of the marriage, the relative income of the spouses, and other relevant facts in a determination of whether and how much alimony should be awarded. These considerations are set forth in the alimony statute as well as the Alimony Guidelines which are followed by the Second Judicial District Court in Albuquerque as well as most of the other district courts around the state. The statute and the guidelines should be consulted early in your case to avoid what could be a long, expensive and the end disappointing process.

Should the parties reach an agreement on alimony, then there are countless ways to structure to payment of alimony. In many cases the spouses may choose to simply follow the Alimony Guidelines by receiving their spousal support/alimony in the form of a monthly payment. However, the spouses can agree that the paying spouse will make a one-time, lump sum payment of spousal support/alimony in lieu of ongoing payments.

Lump sum alimony can itself be structured in a variety of ways. The spouses are free to offset spousal support/alimony against other assets. New Mexico's adherence to the principles of community property means the spouses are entitled to an equal distribution of the assets upon the dissolution of the marriage. Spouses often agree to incorporate a lump sum payment of spousal support/alimony into a community property settlement through an additional allocation of assets to the receiving spouse.

Likewise, as a community property state, New Mexico also holds spouses equally responsible for community debt, which basically includes all debt incurred during the marriage, which provides another option for the offset of spousal support/alimony. The spouse that owes the spousal support/alimony may take on a greater share of the community debt to satisfy a lump sum payment.

In sum there is some flexibility in granting spousal support/alimony and the challenge is to achieve a solution that meets the requirements of the law, while also meeting the financial needs and abilities of the parties. However, this flexibility quickly disappears should the parties proceed to trial. Family court judges have enormous caseloads. They have little time to address alternative means of alimony. Once the matter is before the court, there is typically only one option and that is monthly payments based upon the worksheets set forth in the Alimony Guidelines.

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It is well know that New Mexico is a community property state. The meaning of community property is sometimes difficult to grasp, and the implications for the division of property and debt hard to accept.

The concept of community property views a marriage as a partnership, in which the spouses who own one-half of all the property acquired during the marriage, no matter which spouse's name is actually on the title for the property. The essential elements to determining that an asset is community property are: 1) whether or not the property was acquired during the marriage; and, 2) where the money that paid for the asset came from. If an asset was acquired during the marriage, then it is presumed to be community property.

There are exceptions to the community property presumption. An asset may be deemed to be the sole and separate property of the spouse in whose name it is held, if the spouse can prove that the spouse owned the asset prior to the marriage. Also, an asset may be separate property if: 1) the spouse inherited the asset; 2) the asset was given as a gift solely to one spouse; 3) the spouses entered into a written agreement designating the asset as separate property; 4) if was acquired after the entry of a court order granting a divorce or legal separation; or 5) the Court otherwise declares the property separate.

Given the presumption that all property acquired during the marriage is community property, in a divorce action, the burden of proving that a piece of property is separate falls on the spouse claiming the separate ownership.

It is also important to remember that the definition of property includes more than just the marital home and cars. The definition of property also includes things like: retirement benefits and pension plans; stocks and bonds; insurance policies; income and bonuses; cash; leases and options to purchase real estate; accrued vacation and sick time; and even frequent flier miles among others.

It is important to address each and every significant item of property in the Marital Settlement Agreement. The purpose of a Marital Settlement Agreement (MSA) is to specifically identify and divide all of the spouses' community and separate property, along with the community and separate debt. Keep in mind the value of each item of property and debt. Some items simply lack sufficient value to dispute. Do not let the division of property and debt turn into a contest of ego and will. These are very expensive fights with little return on your efforts, time and money in the end.

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Just as the law in New Mexico treats all property acquired during a marriage as community property, all of the debt incurred during a marriage is viewed as a community debt, for which spouses one-half responsible, regardless of who created that debt. This means that, generally, each spouse is free to create debt in his or her own name during the marriage and it will become a community debt. There is an exception to the presumption of community debt for a mortgage or lease that creates a debt term of longer than five years, in which case both spouses have to sign those contracts in order to create a community debt.

Of course, just like with separate property, a separate debt will be deemed the sole and separate responsibility of the spouse that created the debt when: 1) the debt was created before the marriage; 2) the spouse creating the debt entered into a written agreement with the creditor identifying the debt as separate; 3) the debt was created by separate personal injury or tort committed caused by a spouse; 4) the debt was incurred after the parties were separated, but before the divorce, and was exorbitant, unreasonable or did not benefit the community; 5) the debt was incurred after the entry of a divorce decree or order of legal separation; or 6) the debt was a gambling debt incurred solely by one spouse.

As with property, the purpose of the Marital Settlement Agreement is to identify all of the spouses' community and separate debt and to clearly identify which spouse is going to be responsible for payment of that debt after the divorce. Identifying and classifying debt can be very complicated and spouses should be meticulous in gathering records to support their debt division.

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