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There's a financial lesson for everyday folks in the pending Brangelina split: Location matters.
Angelina Jolie filed for divorce this week from Brad Pitt, citing irreconcilable differences. In the filing with Los Angeles Superior Court, she sought full physical custody of the couple's six children. Jolie did not request spousal support.
Most divorcing couples won't battle over assets on par with the power couple – Jolie, 41, has an estimated net worth of $140 million, according to CelebrityNetWorth.com, while 52-year-old Pitt is reportedly worth $240 million.
But snowbirds and other couples who (like Brangelina) split time across homes in several states may have a choice in which they claim as their primary residence, and in turn where they file for divorce. Picking one state over another can make a big difference on issues including asset division, alimony and custody, said Joslin Davis, president of the American Academy of Matrimonial Lawyers.
"I'm sure that before [Jolie] filed that petition, she and her lawyers very carefully considered the jurisdiction," said Davis, who is also a principal of Allman Spry Davis Leggett & Crumpler, P.A., in Winston-Salem, North Carolina. "Which jurisdiction would be more sympathetic to her goals?"
The big jurisdictional difference is how states handle marital property, said attorney Seth Kaplowitz, a finance lecturer at San Diego State University. Community property states consider most assets earned or acquired during the marriage as equally owned; common law states look at who acquired the property and how it is titled, with the court determining fair distribution upon divorce.
"What state are they domiciled in?" he said. "That's going to be the determination of whether something is community property, equitable distribution or some other aspect."
Rules of the state where you file for divorce typically take precedent, even over assets in another state with different rules.
Alimony can also be a key issue, particularly for couples where one spouse doesn't work, said Davis. She once advised a client splitting time between North Carolina and Texas to shift residency to North Carolina, which has more favorable spousal support laws.
But even if you have multiple homes, you'll still need to meet a state's residency requirements before filing for divorce there.
Divorcing couples with dependent children often have even less choice, said Davis. Under the Uniform Child Custody Jurisdiction and Enforcement Act, states require the case be heard by the "home state" where the child has lived with a parent for the prior six months, she said. In cases where a family has strong ties to multiple states, the courts of those states decide which has jurisdiction.
While divorce and custody proceedings can be separated (so that you could file for divorce in one state and have custody handled in another), that's unusual, Davis said.
Planning can also help divorcing couples work jurisdictional differences in their favor, or lessen the effect:
Set your own terms. A prenuptial agreement, post-nup or settlement agreement can be a smart protection, said Kaplowitz, who is also a partner at Blumberg Law Group in Solano Beach, Calif. That can give couples the ability to dictate how assets might be divided in a divorce, even if state law would set a different allocation.
Keep assets separate. "Generally, the things that people bring into the marriage as sole and separate property, remain theirs unless the things are commingled," said Kaplowitz. Once your $10,000 in savings hits the joint checking account, it's "ours" rather than "yours," he said, and if a spouse contributes money to the mortgage on a house titled in just your name, he or she can make a claim on part of its appreciated value.
If it's important to you to keep certain assets yours, carefully consider if and how you merge finances, he said. It might be better to maintain individual checking and savings with a linked joint account.
File fast. If you and your spouse have the option of multiple jurisdictions, which state hears the case may come down to who files for divorce first, said Davis. If each spouse files in a different state, that can lead to a lengthy and expensive court battle as the states determine which will host the actual divorce proceeding.
Weigh a move. If your marriage is on the rocks, it can be smart to assess laws relating to divorce in all states where you have a home, said Davis. It might be to your advantage to move and establish residency in one location … or avoid an interstate move if your spouse proposes it.