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Changes in Virginia Divorce Law

In response to the Supreme Court decision in Gilliam v. McGrady, the General Assembly amended Virginia Code §20-107.3 (the equitable distribution statute) to include definitions for classifying debt as either marital or separate debt, similar to the process used for classifying property as marital or separate. Ironically, the amendments do not provide statutory guidance for classifying debts incurred by a spouse as a result of a third party’s or business entity’s liabilities. In Gilliam v. McGrady, the question was whether the wife was liable for business taxes owed by a company solely owned and controlled by the husband. After being reversed by the appellate courts, the trial judge ultimately ruled that the wife was not liable. The amendments to §20-107.3 do not address that type of debt. Presumably, the trial courts will follow the principles established by Frank Buck in the Gilliam v. McGrady case. The new law goes into effect on July 1, 2011.

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