The Law Office of Kurt H King

January 17, 2011

Divorce and the Closely Held/Family Business in Missouri

Filed under: Divorce,Family Law — kurthking @ 6:11 pm
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When the owner of a business is involved in a Missouri divorce case, issues can be complicated and expensive to resolve.

Perhaps the biggest issue in a case where husband and/or wife own a business is valuing the business–at least the part that is marital property to be divided. In some cases, the business is one where it has little going concern value were the spouse running it to sell (the “business spouse”). Examples may include the solo practicioner lawyer, some small construction companies, and others where the value of the business is really wrapped up in the connections or skills of a key person spouse.

Take a construction company where home builders call the husband-spouse–a person that the builder knows–to have residential or commercial construction work done. If those builders are unlikely to continue to call on that business if the operating spouse stopped working in the business, then the going concern value of the business may well be basically its net value–assets minus debts/liabilities. In this situation, it may make more sense to hire an appraiser to value the business assets, rather than spend $5,000 and likely more to hire a business valuation expert.

In short, if the business is a key man company and the spouse is the key man, then the business may not be worth much more that its assets minus liabilities in a case where the business is sold/liquidated in a divorce case scenario.

On the other hand, many are fortunate to own a business which other people or companies would like to buy for considerable amounts of money. If so, then you can expect to need solid expert business valuation testimony at trial to support what you believe to be the correct value of the business. Don’t plan on just handing all the financial reports to the judge to figure it out. Business valuation takes many hours of time, research, accounting expertise, experience, and training. Most judges do not have that kind of time and training. Even if they do, it is an unfair and unwise imposition on the judge to simply drop it all in his/her lap to do the work for you. This is even more true when the other side of the divorce case brings their expert to give his/her valuation opinion with supporting explanation, but you don’t. Guess which value the court is likely to find as that of the business when one party/side to the case fails to carry his/her burden of proof?

Keep in mind that the business spouse may cause the business to retain extra earnings to lower his income from the business. Or, the business may take on new leases, loans, and debt to confuse as to its true net worth. Or, maybe the business spouse decides to buy business equipment/property to reduce its net cash flow. There are many other such moves that can be made.

Yet another consideration arises where the key person spouse is going to keep on running the business, and the business has a history of substantial income. Then the spouse not in the business may want to claim a serious amount of maintenance–formerly called alimony–to be paid by the busniess spouse. This claim may cause the business spouse to agree to pay a substantial amount–lump sum maintenance–to the other spouse to “buy out” of having to pay months and years of maintenance. (Maintenance set by the judge and not by agreement often runs indefinitely until termination by law–death, remarriage, for instance.) So, you may want to keep this in mind.

Let me close this small post on a large subject by cautioning against just taking your spouse’s word for what the business is worth. First, he/she may not know the correct value. Secondly, in a divorce the business spouse is probably trying to pay you as little as possible for your share of the business. Get your own people to check it out. Otherwise, you may find yourself agreeing to settle for far less than what your half of the business is worth.

There are many angles to this situation, and whole books could be written on the subject. Be careful and have it checked out by persons who are looking out for your best interests. Don’t be naive.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068

http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Missouri Workers’ Compensation

January 10, 2011

Reaffirmation Agreements in Missouri Chapter 7 Bankruptcy Cases

Filed under: Bankruptcy,Uncategorized — kurthking @ 6:07 pm
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Many times a debtor wants to keep a car or house, for example, in a Chapter 7 bankruptcy case here in Missouri. And, creditors nearly always would rather have the debtor keep the vehicle and continue to make the payments on the loan from that creditor secured by a lien on the vehicle or house. Consequently, Chapter 7 bankruptcy law gives the debtor the options of (1) surrendering the vehicle/home/other asset to the creditor, (2) entering into a reaffirmation agreement, or (3) the rarely exercised option of redeeming which requires a single large payment to the creditor to retire the debt forever.

In a reaffirmation agreement, both debtor and creditor/lender agree in writing in a certain form that the court requires that the debtor keep the asset and make the payments to the lender despite the bankruptcy.

The agreement must be one that the debtor can afford. This is very important because the debtor cannor refile Chapter 7 for 8 years. If during that 8 years the debtor fails to make the payments on the loan or otherwise defaults on the loan, then the debtor is likely to be sued and may well suffer garnishment of wages and execution on bank account assets by the lender to obtain repayment of the balance of the loan that the debtor reaffirmed. DO NOT REAFFIRM UNLESS YOU ARE REASONABLY CERTAIN THAT YOU CAN PAY OFF THE FULL LOAN ON THE REAFFIRMED DEBT.

A side note on this topic is that some home lenders have refused to join in reaffirmation agreements. Rather, such a lender simply lets the debtor of the Chapter 7 bankruptcy case stay in the residence as long as debtor making the loan payment to pay off the loan in full per its original terms. If the debtor so pays off the loan over the years, then: the creditor gets its money, releases the lien, shows the loan satisfied in full; the debtor owns the home free of the lien of the loan; and, all are happy.

But what if a few months or years after the Chapter 7 bankruptcy case closes, the debtor/home owner fails to make the loan payments and the loan hits default status leading to foreclosure sale?

With a foreclosure sale, the debtors look pretty certain to lose the house.

The sticky issue is whether the debtor/home owner will also be personally liable for any deficiency–that is the balance of the loan that remains due even after the sale of the property for less than the full amount due on the loan and foeclosure expenses. The debtor/home owner may claim that the debt/home loan was not reaffirmed in the Chapter 7 bankruptcy and thus discharged, which would mean no personal liability on a deficiency judgment. But will the creditor and the court agree? And, can the debtor/home owner afford to hire an attorney to protect his position in court so the judge makes the right decision? Unfortunately, debtors that want to reaffirm and keep the house will have to go this route to keep the home when the practice of the home loan lender is not to enter into written reaffirmation agreements filed with and approved by the bankruptcy court.

Note that the bankruptcy court does not now make creditors provide or enter into reaffirmation agreements in Missouri Chapter 7 cases.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

Bankruptcy–Chapter 7 Exemptions in Missouri

Filed under: Bankruptcy — kurthking @ 5:27 pm
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Missouri law sets out several kinds and amounts of property that debtors keep free from creditors in a Chapter 7 bankruptcy case. Some of the usual ones are summarized below. Note that there are many others under Missouri law which are NOT listed below so check your particular case with a lawyer.

Missouri statute 513.430: Household furnishings and goods, clothing, books, animals, etc., for personal, family, or household use—$3,000 per each debtor
Wedding ring—$1,500 each debtor
Other jewelry—$500 each debtor
Wildcard to apply to any property—$600 each debtor
Implements/tools/ professional books of the trade of debtor or dependent—$3,000 each applicable debtor
Any motor vehicle “in the aggregate”—$3,000 each debtor
Any one or more unmatured life insurance policy/contracts
Professionally prescribed health aids (glasses, hearing aids, wheel chair, etc.–no dollar limit)
Rights to receive Social Security, unemployment, LOCAL public assistance benefit (does not now cover Earned Income Credit tax refund)
disability, veteran’s benefit (but this does NOT protect one the benefit is paid to you, for example if it is in your checking account)
Right to receive alimony/maintenance or child support up to $750 per month
Certain qualified retirement plan assets (401k, IRA’s, pensions, possibly others)
Certain wrongful death benefits
And certain other exemption property

Missouri Statute 513.440 The head of the household gets to apply an exemption to any property—$1,250, plus $350 per unmarried, dependent child under age 18

Missouri Statue 513.475 One homestead exemption of up to $15,000 of equity in the debtor(s)’ home

These are some common exemptions that help folks keep a few basic assets even though they file Chapter 7 bankruptcy in Missouri. Remember that there are many other exemptions which could also apply in some cases.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

January 7, 2011

Bankruptcy and Divorce in Missouri

Filed under: Bankruptcy,Divorce,Family Law — kurthking @ 6:07 pm
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Many spouses in broken marriages face filing (1) Chapter 7 bankruptcy and (2) for divorce. When couples divorce, many lack enough income to pay his/her share of the bills/debts. Should they file bankruptcy first, or start with the divorce, or do both at once?

Here are some considerations:

1. A husband and wife can file bankruptcy together in a single case. After the divorce, the couple are no longer married and each has to file their own bankruptcy case which doubles the total cost in attorneys fees and court filing fees. With attorneys fees of up to $2000 per case (or more) and a filing fee now of $299, it saves money to file 1 case instead of 2.

2. Can the couple agree/cooperate well enough to file the bankruptcy together? If not, then he/she will have to file bankruptcy separately. Preferably he/she/each files before the divorce so all the debts of the person filing are wiped out by the bankruptcy, making it easier to settle or for the judge to decide the divorce case because it is often more simple to divide property than it is to divide both property and the debts.

3. Also, it may be better to discharge the debts in Chapter 7 bankruptcy before filing for divorce, because divorce cases which address division of debts typically call for for each spouse to pay some of the joint debts, and to indemnify/reimburse the other spouse if the creditor collects from the other spouse who was NOT ordered to pay the debt. These indemnity provisions generally do NOT go away in Chapter 7 bankruptcy cases, which, means that one spouse could be forced to repay the other ex-spouse after the divorce. It is better to wipe out these debts with bankruptcy before divorce to reduce the exposure to having to indemnify an ex-spouse for joint debt the court ordered you to pay and hold harmless/indemnify.

4. Can the divorce and the bankruptcy cases run at the same time? Yes they can both be filed and pending in court at the same time, but when division of property is involved, the automatic stay in bankruptcy law (11 U.S.C. 362(b)(2)) will put a stay/stop on the divorce case as far as property until the bankruptcy court determines what property goes to creditors. A bankruptcy case with no assets for creditors takes 3 months or more, so considerable delay can result while the spouses wait to get divorced.

5. There are many other factors such as the incomes of the parties and whether their combined or separate incomes are too great to qualify under the means test of Chapter 7; who has filed bankruptcy before, what chapter of bankruptcy, and how long ago (8 years or more?); etc.

These are thorny questions for you and your attorney.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

January 6, 2011

Maintenance/Alimony and Divorce in Missouri

Filed under: Divorce,Family Law,Support — kurthking @ 5:39 pm
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Spouses headed for divorce often wonder about maintenance–what used to be called alimony.

Here in the Kansas City area, and presumably other Missouri courts, the judges lean away from maintenance. This is especially true where the marriage is short–less than 10 years for instance.

Maintenance in the typical situation arises when one spouse lacks income to pay his/her necessary bills while the other spouse has income to contribute. Many times a judge will take a sharp pencil, so to speak, to the expense amounts of the needy spouse; then do likewise to the expenses of the spouse who may have extra income. If that review shows a legitmate shortage of income for one spouse, and income remaining after expenses for the other spouse, then the extra income may be ordered paid to the needy spouse in an amount that the court finds is best after the court also considers the factors set out in Missouri statute 452.335 (marital misconduct, time to re-educate, etc.). Often times neither spouse is really happy about a maintenance order–one spouse thinks it too high, while the other thinks the amount awarded is too low.

A major consideration in maintenance cases is how long will the payor have to pay maintenance. Death or remarriage of the payee often terminates the obligation to pay maintenance unless the parties have agree otherwise. The key to keep in mind, however, is that unless there is sufficient proof of a definite date that maintenance is no longer needed, it may be required to be paid until such death or remarriage which may be years and years down the road.

Because the risk of an open-ended order to pay maintenance with no termination date is so great, many spouses faced with a real possibility of the court ordering he/she to pay maintenance often negotiate about a stop date on maintenance. To get that stop date, the paying spouse often has to give up assets or agree to pay a somewhat high amount per month as compared to what he/she thinks he would have to pay if he left it up to the judge to set the amount and duration.

Another motivation for settling to get a definite stop date on maintenance is that without the agreement, the party receiving maintenance can later file a motion to modify under Missouri statute section 452.370 to increase the amount or duration of maintenance being paid. To make that case for modification, the receiving party must prove a substantial and continuing change of circumstances based on the facts of the case. Negotiating a written agreement on maintenance with a provision that it is non-modifiable protects against a later modification case to increase maintenance.

A pretrial conference with the judge is a good way to get a read on what the judge may do and thus what it may take to reach an agreement on maintenance. Each legitimate maintenance case tends to turn on its own facts and there is no formula in which to simply plug numbers as with child support. The experience of counsel in similar cases may be best guide, aided by the pretrial conference.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

January 5, 2011

Costs–Hip Replacement

Filed under: Litigation,Missouri Personal Injury Law — kurthking @ 8:19 pm
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Here are hospital and surgeon costs for hip replacement after injury in motor vehicle accident in this Kansas City, Missouri area:

1. hospital $60,124
2. surgeon $4,532 (plus $2000 if use assistant)

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

Changing Child Custody or Support by Agreement in Missouri–Get a Court Order!

Filed under: Custody,Family Law,Support — kurthking @ 5:45 pm
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What if father pays child support and mother brings the children to him and says, “you take care of them–and I don’t want any child support?” What happens if the father stops sending in his child support to the Family Support Payment Center? And, what if mother changes mind 7 months later and takes children back?

The father in this example needs to file to get a court order immediately based on a stipulation/agreement with mother, or otherwise if she won’t sign a stipulation, changing custody and terminating his child support obligation.

If he fails to do so, his child support obligation does NOT stop, he builds up a child support non-payment arrearage, and he lacks the court order to prove that he now has the primary/home/residential custody rights to the children. That let’s the mother in this example walk back in and take the chilren–even claim the back due child support that accrued while the father had the children (she may or may not win on the back support but she puts father out to hire an lawyer and try to get court order that he does not owe the back support).

This happens time and again, often to folks who cannot afford to make a mistake and cannot repay back child support.

Get A Court Order or Beware.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

Child Support and College

Filed under: Family Law,Support — kurthking @ 5:31 pm
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Many divorced folks wonder what their child support obligation is for children in college or other post-high school education/training. There are many facets to this question but let me point out some of the main points:

1. Missouri law changed from 22 to 21 as the age up to which support is required (exceptions for non-self supporting children with special needs);
2. Parent paying child support can ask court for permission to pay support directly to the child so attending;
3. Child generally has to provide enrollment and grade information and take sufficient number of hours (be full-time, basically) or else child support obligation may be terminated;
4. Some judges expect child to pay for some of college/post H.S. education expense by student loan, work, other;
5. Some judges look at parent incomes and other factors and may not require student to pay for part of such costs;
6. In Missouri, such college/post-high school education costs are generally capped at what tuition, books, meals, and housing would cost on a plan for a regular year at the University of Missouri–not what a more expensive private or Ivy League school costs;
7. I believe most judges consider if the child commutes from home to the school, spends the summers and school breaks at home, etc., to determine how much support should continue to be paid to the home parent of the child. For example, if the child is home 4 months a year and in school dorm the other 8, then judge may consider having the total of 4 months of support, divided by 12 so that the paying parent pays a part each month of the year, continue on being paid to the home parent, so to speak.

These are some basic factors and there are usually more to be considered. What is fair for one situation may not be for another, so check it out–especially given the amount of money involved.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

Slip & Fall case out of Clay County, Missouri

Filed under: Litigation,Missouri Personal Injury Law — kurthking @ 5:10 pm
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Here in Clay County, Missouri, a tenant slip and fall case against the landlord went up to the appeals court which outlined Missouri law on point. The appellate opinion is at 935 S.W.2d 649 out of the Western District of the Missouri Court of Appeals, and titled Uptergrove v. Housing Authority of the City of Lawson, Mo.

This case makes a good statement of Missouri law existing on this area of personal injury law. The general rule in Missouri is that the landlord has no duty to tenant to remove snow and ice from the common areas of the apartment complex, unless he takes on that duty: (1) by agreement with the tenant, or (2) assumed the duty by making it a practice to remove the snow and ice.

Some tenants who are injured by slip and fall on a common walkway or parking lot look to their lease (usually provided by the landlord for the landlord’s benefit) and see that it puts no duty to remove on the landlord, or states that the tenant waives/releases his/her claims against the landlord for non-removal of snow and ice. Don’t make the mistake of thinking that is the end of your claim. There is more to it than that and the tenant may still have a case to recover for personal injury, loss of wages, property damage, etc. Have it checked out.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

Waivers/releases of liability in Missouri

Filed under: Litigation,Missouri Personal Injury Law — kurthking @ 4:54 pm
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Are waivers/releases of liability in leases, gym contracts, etc., binding under Missouri law? Answer: sometimes not.

These provisions are everywhere now days as landlords, gym owners, and many others want the other party to sign standard contracts with provisions that the “little guy” releases or waives all claims he/she may have against the landlord (for example), even if the negligence or fault of the “big” party to the contract is the cause of injury or damage to the “little” party. For example, these provisions are used to bar claims by gym users who are injured by faulty gym equipment, tenants who slip and fall on ice and snow which the landlord failed to remove despite a duty to do so, and on and on.

In the case of Alack v. Vic Tanny International of Missouri, 923 S.W.2d 330 (1996), the Missouri Supreme Court set some limits on these waivers/releases and they should NOT be valid/binding on the injured party unless the written language satisfies these rules.

One requirement is that the waiver/release language must be clear and conspicuous–meaning it should be in bold/large/standout type, preferably referred to in the title, and noted by a subheading or title that stands out and makes it known that the provision deals with waiver/release of liablility. This is particularly true of residential or consumer contracts where the party that is waiving claims of liability of the other party is not as sophiscated or experienced as a commercial business would be. A good idea is to have the waiver/release in a separate document, so titled, and executed by the parties to the agreement

Another requirement is that the waiver/release language be clear, unambiguous, and free of duplicity. For example, take a lease contained 2 separate and different provisions calling for the tenant to waive and relase the landlord from any liability for not timely removing/treating snow and ice at the apartment complex. And, one of the provisions called for the the landlord not to be liable to the tenant for such under any circumstances, while the other provision called for the landlord not to be liable unless it was grossly negligent or intentionally injured the tenant. These provisions obviously differ and are unclear to lawyers–and surely the tenant is confused. Such ambiguous, unclear, and conflicting provisions could and should be struck down by a Missouri court so that the tenant or other “little guy” is free to sue the “big” party for the wrongdoing of the “big” guy.

The Alack court decision above, also states point blank, that “there is no question that one may never exonerate oneself from future liability for intentional torts or for gross negligence, or for activities involving the public interest.” More reasons why a waiver/release may be void.

Bottomline: Just because the contract says so, does not mean the waiver/release will hold up in court. Have it checked out by your lawyer to be sure.

Kurt H. King
Law Office of Kurt H. King
816.781.6000
20 E. Franklin
Liberty, Clay County, Missouri 64068
http://www.kurthking.com

Bankruptcy, Child Custody and Support, Divorce and Modification, Family Law
Personal Injury, Workers’ Compensation

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