April 2013 Archives

Celebrity Divorce - Kris Humphries Skips Mandatory Settlement Conference

kardashian-humphries-celebrity-divorce.jpgOn April 12, 2013, Kim Kardashian arrived at the family courthouse in Los Angeles to attend her Mandatory Settlement Conference ("MSC"). As San Diego divorce attorneys are aware, if the parties are unable to reach an agreement and must proceed to trial for court intervention on any issues, they are required to attend a MSC before the trial. An MSC is a settlement conference run by a local experienced family law attorney who attempts to help the parties reach an agreement outside of court. Unfortunately Kardashian and her attorney were the only ones to attend this conference. As it is impossible for two people to reach an agreement when one of them is not present, the MSC did not go forward.

Learn more about the San Diego divorce process

As attendance at a Mandatory Settlement Conference is not optional, MSC's tend to foster settlement in cases in which the parties could not previously reach an agreement. By the time an MSC is set by the Court, discovery is coming to a close and both parties should have enough information to reach an agreement. MSC's give the parties and divorce attorneys a chance to sit down in person and attempt to hash out the disputed issues. This may be the first time in the entire case that the parties and attorneys communicated together in person. With the time and expense of trial fast approaching, parties can be highly motivated to settle the case at an MSC. It is evident that Humphries was not motivated to settle his divorce case. In fact, as we have previously blogged, he had dragged out the process for over a year.

After clearing out the courtroom for the celebrity divorce hearing, the Court was not pleased when Humphries "no-showed". As a result, the Court, on its own motion, set a hearing for sanctions to be imposed against Humphries. On April 19, 2013, the Court convened to give Humphries a chance to explain his disrespectful behavior towards the Court and the divorce process. Sanctions could have been awarded by California family courts, however in an unexpected turn of events, Judge Goldberg has granted Kim Kardashian a divorce from Kris Humphries. The judgment has yet to be fully entered, and is expected to be finalized by the court by June 16th.

Read more articles from the Law Offices of Nancy J. Bickford about celebrity divorce

In San Diego, family law attorneys often request the court order sanctions against the opposing party. Under Family Code §271, the Court may award monetary sanctions if it determines that one party is frustrating the public policy to promote settlement. It is clear by Humphries failure to appear at the mandatory settlement conference that he was intentionally frustrating the settlement of his divorce case. Thus, at the April 19th hearing, if Ms. Kardashian had not asked the court to drop the sanctions matter (as reported by Today), the Los Angeles court could have imposed a sanction against Humphries. Had this happened, it would have likely been pursuant to Family Code §271. The amount of sanctions is usually set at an amount sufficient to deter repetition of the party's bad behavior.

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Family Law and the Lottery - Pedro Quezada Settles $29,000 Child Support Debt

family-law-lottery.jpgRecent winner of the $338 million Powerball jackpot, Pedro Quezada, has more money now then he probably knows what to do with. However, soon after coming forward as the winner of the fourth-largest Powerball jackpot in history, authorities revealed that this new multi-millionaire was wanted for outstanding child support payments totaling $29,000. Astoundingly, the arrears dated all the way back to 2009! Luckily for Quezada's ex-wife and his five children, who range from ages 5 to 23, Quezada can now finally pay up on the $29,000 of child support that he owes. According to the Passaic County Sheriff's Office, Quezada appeared in court recently to do just that.

The fact that Quezada was $29,000 behind on child support payments may leave many divorcing spouses left wondering what their recourse may be when the other spouse isn't paying up on ordered child support payments. Although not too common, this is especially the case when the obligor spouse (i.e. the spouse who has been ordered to pay child support) suddenly gets lucky enough to hit the lottery jackpot. It is likely that Quezada consulted with a family lawyer soon after winning the lottery.

Learn family law terms commonly used in California


Family law attorneys often console clients by letting them know that when the obligor spouse fails to make child support payments, the receiving spouse has several options to enforce the child support order. Although there are quite a number of options, family lawyers will advise that the best option to pursue often depends on what the obligor spouse has and where he or she works. These options include, but are not limited to, mandatory wage withholding, liens on personal property (such as bank accounts or vehicles) or real property, fines/possible imprisonment, license suspension and various methods of interception.

One such interception method used by family lawyers to enforce a child support order is known as the "Lottery Winning Intercept Program," which in essence automatically deducts money from the obligor's California State Lottery winnings and then forwards that money to the State Disbursement Unit (SDU) to pay past-due child support. However, family lawyers can only use this method after all taxes and tax liens have already been satisfied. (California Code of Civil Procedure Sections 708.730 & 708.795).

Read more from The Law Offices of Nancy J. Bickford on divorce and finances

family-law-windfall.jpgLuckily for Quezada, he likely still has plenty of money left over after accounting for his taxes and tax liens. It is reasonable to think that the $29,000 in child support payment that he owed is now likely just a small chuck of change to him, and he probably won't even notice a $29,000 deduction from his lottery winning.

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Divorce - Non-Disclosure of Assets Could Lead to a Lawsuit

Recently, Patricia Cohen's lawsuit against her former husband, billionaire Steve Cohen, was given the green light by a New York court. Ms. Cohen and her divorce attorney filed the lawsuit accusing Mr. Cohen of hiding assets during their 1990 divorce. In 2011, Ms. Cohen's lawsuit had been dismissed because the court determined that her allegations of fraud were stale and too unsubstantiated. However, recently the U.S. Circuit Court of Appeals determined that Ms. Cohen's claims were not too old considering the fact that she only uncovered the evidence sited in support of them in 2008.

The basis of Ms. Cohen's lawsuit, as she alleges, is that Mr. Cohen failed to disclose a $9 million investment during their settlement process. Mr. Cohen invested $9 million in co-op apartments in 1986 and claimed during the divorce proceedings that he lost the entire investment. If true, Mr. Cohen's net worth was only approximately $8 million at the time of divorce. Therefore, a $9 million dispute is significant considering the parties financial circumstances at the time. Although Mr. Cohen claimed the investment was completely lost, Ms. Cohen suspected he was lying. However, it was not until 2008 that Ms. Cohen found court documents suggesting her suspicions were correct. It was this discovery that prompted her to contact her attorney and file the lawsuit against her former husband.

Assets Hidden in Divorce

Del Mar divorce lawyers have a variety of tools they can use to discover undisclosed assets such as Demands for Inspection, Special Interrogatories, Form Interrogatories, or even through the subpoena process. However, despite everyone's best efforts, assets can still be hidden by clever spouses. If a family law attorney does not know that an asset exists, he or she will not know which questions to ask, which documents to ask for, or which entities to send subpoenas to. If the attorney suspects a particular asset exists, he or she may still encounter the same roadblocks without information regarding where the asset may be located.

In many cases, San Diego family law attorneys are able to discover all of the parties' assets. However, this does not change the fiduciary duties both spouses owe to each other. Specifically, both spouses have a legal obligation to disclose all assets, liabilities, income and expenses. Divorce attorneys in Del Mar are well aware of this, and if the court determines one spouse has breached this duty while the other has not, it must award sanctions in favor of the complying party. Monetary sanctions will be awarded in an amount sufficient to deter repetition of the poor conduct. The exact amount will be dependent on the net worth and income of the breaching spouse. If a spouse discovers an undisclosed asset after settlement or after trial, he or she may still seek remedies from the court.

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San Diego Divorce Timeline - What You Can Do to Speed it Up (Part 2)

As we have previously blogged, there are two distinct divorce paths that spouses can take in a San Diego divorce proceeding, the litigation path and the mediation path. As the case goes on, parties may end up using a combination of the two approaches. Part one of this blog explained the litigation process and its many disadvantages such as its high cost and lengthy waiting periods. By contrast, the mediation process is more efficient, less expensive, and less stressful for all parties involved, especially the children.

The Mediation Path

divorce-timeline-pt-2.jpgIf the parties and their attorneys determine that they are able to work cooperatively with the other side and that court intervention is not necessary, they may elect the mediation process outlined below. A mediated divorce typically proceeds as follows:

The parties must first decide if they will retain independent counsel, usually a divorce attorney experienced in advising clients in mediation. In addition, a third party neutral will be selected, regardless of whether the parties have retained counsel or if they will both meet with the neutral unrepresented.

Read questions frequently answered by divorce attorneys

Next, the parties should determine which issues are settled and which issues are disputed. For example, in a Del Mar divorce the parties may realize they agree to divide all of their property equally, but happen to disagree on a reasonable amount of monthly spousal support.

As in the litigation process, the parties must also complete their Declarations of Disclosure including a Schedule of Assets and Debts and an Income and Expense Declaration. However, the parties will not engage in expensive and lengthy discovery because they have decided to cooperate with each other informally.
Once the parties have met with the mediator and agreed on all terms of the settlement, the mediator may draft a martial settlement agreement and file all necessary paperwork with the court.

Learn terms commonly used in a San Diego divorce proceeding

It is evident from the above timeline that a mediated divorce take much less time, effort and money than a litigated proceeding. The better the parties work together to resolve their disputes, the lower the cost of the divorce. There are no "winners" if a divorce case goes to trial because each party will have incurred significant expenses and emotional scars. In mediation, parties have the flexibility to create their own terms and solutions which are mutually beneficial.

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San Diego Divorce Timeline - What You Can Do to Speed it Up (Part 1)

San Diego Divorce Timeline - LitigationIn San Diego, once parties decide to file for divorce, it is not uncommon for them to be in a rush to just "get it over with". However, rushing through the divorce process is easier said than done.

One of the most important factors in determining the length of the divorce process is whether the parties and their attorneys decide to take the litigation path, the mediation path, or a combination of both.

The Litigation Path

If the parties and their attorneys determine that they are unable to work cooperatively with the other side and that court intervention is necessary, they must follow the litigation process outlined below. A highly litigated divorce typically proceeds as follows:

If a Petition has not already been filed, one party must file a Petition and Summons and formally serve these documents on the other side. This process is commonly referred to by San Diego family attorneys as "filing for divorce". The party who filed the Petition is known as the "Petitioner" and the other party is known as the "Respondent".

The Respondent must then file a "Response" to the Petition within 30 days of service. Both parties will then begin completing their Preliminary Declarations of Disclosure which includes a Schedule of Assets and Debts and an Income and Expense Declaration. Within these documents, the parties will explain their income and their monthly expenses in addition to identifying all community property assets and obligations.

Next, the parties can file various motions requesting relief such as temporary child or spousal support, temporary child custody and visitation orders and attorney fees. The timeline for all motions to be heard ranges from an average of 30 days to a year depending on the number of motions, complexity of issues and requests for continuances. If custody and visitation is a disputed issue in the case, the parties must attend Family Court Services mediation or another private mediation.

The parties may conduct discovery to find out more information regarding disputed issues. If spousal support is disputed, the parties may investigate issues such as income and assets. If any disputes arise during the discovery process, the parties may file Motions to Compel with the Court to enforce their rights. Should the parties have complex assets or income which is difficult to ascertain, one or both parties may elect to hire experts to weigh in on these issues.

Mandatory Settlement Conference
In San Diego, before the case proceeds to trial, the parties must attend a Mandatory Settlement Conference. This is a meeting between all parties, attorneys, and an independent experienced local family law attorney. If the parties do not reach an agreement, the case may proceed to trial. At trial, both parties present their side of the story with regard to disputed issues. The judge will make a ruling and determine the outcome of all disputed issues.

It is evident from the above timeline that a litigated divorce takes a significant amount of time, money and effort. Even with the assistance of counsel, many divorcing spouses who litigate a large amount of issues call their divorce a "full time job". In our next blog post, the divorce attorneys at the firm will post about "The Mediation Path". Stay tuned!

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Is Spousal Support Always Reported as Taxable Income to the Receiving Spouse?

With Tax Day (April 15th) near approaching, both CPAs and divorce attorneys alike are likely receiving an influx phone calls from clients regarding the tax implications of spousal support, often referred to as alimony.

Generally, spousal support is considered to be tax-deductible to the spouse who is paying the support. On the other hand, spousal support must be reported as taxable income to the spouse who is receiving the support. For individuals who stay at home to care for young children and have no other source of income other than the receipt of spousal support after divorce, the tax hit due April 15th might pose quite a significant financial concern.

Tax Return and Spousal SupportAlthough not commonly known, spousal support payments can in fact be designated as non-taxable and non-deductible so long as both parties agree and such an agreement is pursuant to a divorce or separation instrument. During divorce settlement negotiations, agreeing to designate spousal support as non-deductible and non-taxable may be suggested by divorce attorneys in situations where the paying spouse does not want/need the tax deduction, and the recipient spouse does not want to report the income. For instance, as described above, the receiving spouse may not want to report the income so as to avoid the tax hit at the end of the year. Lolli-Ghetti v. Lolli-Ghetti, on the other hand, is an example of a divorce case where the payee spouse did not need the tax deduction because he was a resident of Monaco and the bulk of his income was therefore not subject to federal, state and local income taxes.

There are three types of divorce or separation agreements by which the designation of non-taxable/non-deductible spousal support can be detailed in:

  1. A decree of divorce or separate maintenance or a written instrument incident to such a decree;

  2. A written separation agreement; or

  3. A decree requiring a spouse to make payments for the support or maintenance of the other spouse (as defined in 26 U.S.C. §71 (b)(2)).

The instrument must contain a clear and explicit designation that the parties have elected for the spousal support to be non-taxable to the payee and thus excluded from payee's gross income and non-deductible to the payor. It is also important to note that a copy of the instrument, which contains the above designation of spousal support payments as non-taxable/non-deductible, must be attached to the payee's tax return (Form 1040) for each year that the designation applies to.

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Part II: Religion and Child Custody

Sharing Custody of Children During Religious Holidays

As previously blogged about in "Part I: Religion and Child Custody," a common issue in divorce revolves around which religion a child will follow after parents separate. Another common issue recognized by divorce attorneys is how to fairly share custody of children during religious holidays. The recent passing of the Easter holiday likely posed a special concern for divorcing parents with children. In our previous post, we discussed parents with sole legal custody.

Read more about custody and divorce in Del Mar

Divorce and Religion - Part 2.jpgJoint legal custody presents divorce attorneys with unique issues. If both parents share joint legal custody, and one parent objects to the other parent's decisions regarding the child's religion, a judge will have to determine whether the child can be raised as a Catholic, Buddhist, Jewish, etc. The courts will generally first consider the religion that the child was raised in while the parents were still married and order that the child continue to be raised in that same religion.

Since the right to raise a child as the parent sees fit and the right to freedom of religion are both protected by the Constitution, courts must be careful not to infringe on these constitutional rights while still protecting the best interests of the child.

Joint physical custody means that both parents share in the right to spend time with the child or children. Despite custody agreements, problems always seem to arise with regards to holidays, especially when each parent has his/her own religious beliefs and traditions. Holidays like Mother's Day and Father's Day are usually easy to compromise, because they have alternative days to give each parent equivalent time. However, the same cannot be said for religious holidays such as Easter. Easter does not have an alternative celebration date. Divorce lawyers must consider their client's faiths when providing legal advice.

In order to deal with this problem, many divorce attorneys will advise their clients to agree to alternate custody between holidays each year, such as Easter and Thanksgiving. However, for some parents who are particularly religious or have long-lived family traditions, they do not consider the Easter holiday to be equivalent to the Thanksgiving holiday. Thus, shared custody on holidays needs to be determined well ahead of time and with the children's best interests in mind.

Children With Parents of Different Faiths

Another problem arises where divorcing parents are of differing faiths. For example, where one parent is Christian and the other is Jewish, the Easter and Passover holidays usually pose a concern regarding child custody because the holidays often fall near each other on a calendar. Sometime these two holidays will even occur on the very same day. Therefore, it is extremely important that these situations are discussed early on, and that divorce lawyers draft custody agreements that spell-out exactly what will happen with regards to custody to the greatest extent possible.


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Part I: Religion and Child Custody

Which Religion do Children Follow when Parents of Different Faiths Divorce?

With the recent passing of Easter, a Christian holiday, and Pesach (Passover), a Jewish holiday, parents of different faiths may be left wondering which holiday their child will celebrate after a divorce. Because divorcing parents don't always agree on whose religion the children will follow after divorce, the Court is often left to make a determination as to which religion the children will practice, if any.

Divorce, Child Custody, and Religion 1

The Fourteenth Amendment substantive due process clause grants parents a liberty interest in directing their child's religious upbringing. Therefore, Courts must protect each parent's Constitutional right to raise the child as that parent sees fit (as long as the welfare of the child is not endangered). However, when parents divorce, the Courts are often left to decide which parent's constitutional right will prevail in determining the religion of their child. Family law attorneys take a number of factors into consideration when advising clients about their options in regards to their children's religious upbringing.

Child Decides

Often times the Court will simply allow the child to decide which religion, if any, to follow because it is merely an exercise of the child's First Amendment right to freedom of religion. Unfortunately for divorce lawyers, no black letter law exists regarding what age a child must be to decide his or her own religion. However, courts generally consider children over 12 to be able to make decisions about their religious preferences.

By allowing the child to determine his/her own religious preference, the courts are not encroaching upon the parents' Constitutional rights. The parents may continue to practice the religion of their choice, and they have already had the opportunity to exercise their Fourteenth Amendment substantive due process liberty interest to direct their child's upbringing.

Parent With Sole Legal Custody

When a child is not deemed fit to decide for himself/herself, divorce attorneys note that the court will look to which parent has been awarded legal custody. As discussed in previous blogs, legal custody gives a parent the right to make decisions regarding a child's health, education, welfare and even religious decisions. If a parent has been awarded sole legal custody of the child, then that parent alone can make all the decisions regarding the child's religious preference and activities without getting the consent of the other parent or an order from the court.

Parents with Joint Legal Custody

Tomorrow, in "Part II: Religion and Child Custody", we will discuss the issues presented to divorce attorneys by parents who share joint legal custody of their children. Divorce, Child Custody, and Religion 2

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George Clinton's Wife Demands Full Disclosure in Battle Over Spousal Support

Divorce Blog Guitar
Funk music innovator, George Clinton, and his wife of 23 years, Stephanie Clinton, are now amidst a battle over spousal support. TMZ reports that Stephanie is now seeking Clinton pay up and is requesting the court to order both temporary and permanent spousal support. Clinton is reportedly not too pleased about this request because he had previously claimed that the couple had been separated for many years and they didn't have any shared bank accounts or real estate. However, Stephanie is requesting that the court make Clinton disclose all of his finances, including taxes, bank accounts, etc. Stephanie wants to know exactly how much spousal support she is entitled to after their 23 years of marriage. The question remains, to what extent does Clinton really have to disclose?

As divorce attorneys know, declarations of disclosure are essentially the backbone of a divorce case. In California, Preliminary declarations of disclosure are mandatory. Final Declarations of disclosure, on the other hand, may be waived by both parties. With regards to disclosure, California Family Code Section 2100(c) requires complete disclosure of all assets and all debts that the parties may have any interest in. The disclosure must occur early in the divorce or legal separation process, and must occur together with a disclosure of all income and expenses.

Read more about fiduciary duty and divorce in California

Types of Disclosure:

Such disclosure requires preparation of the following documents by divorce attorneys:

  1. Schedule of Assets and Debts;

  2. Income and Expense Declaration;

  3. Statement of material facts regarding valuation of all community property assets;

  4. Statement of material facts regarding obligations that the community is liable for; and

  5. Disclosure of any investment opportunity, business opportunity or other income-producing opportunity.

Divorce Declaration of DisclosureWhile these forms may seem fairly simple and straightforward, it is very important that divorce attorneys advise their clients to be extremely open and comply with the full disclosure requirement. This means that that ALL liabilities and ALL assets must be accurately disclosed. This often requires the client to spend a lot of time thumbing through old files of financial statements to find the most recent balances and accurate information. It is also vital that divorce attorneys remind their clients that the disclosure requirement applies to assets and liabilities that the client may have in the future, such as potential business opportunities that the client is aware of. Even though the client may think that an asset or debt is a separate property item, it must still be disclosed in accordance with California Family Code Section 2100.

Learn more about property and divorce

Failure to Disclose = Sanctions?!

Failure to comply with disclosure requirements can result in significant sanctions, so clients should think twice about leaving out an asset or two. For instance, in In re Marriage of Feldman (2007), 153 Cal. App.4th 1470, the Husband failed to disclose numerous transactions and the formation of new companies, which were all quite significant. Wife found out about these assets by other means and filed for sanctions pursuant to California Family Code Sections 1101(g), 2107(c) and 271(a). The court held that husband could be sanctioned, and as a result Wife was granted $250,000 in sanctions! The court reasoned that Husband had an obligation to fully disclose all material facts and information regarding all assets in which the community has or may have had an interest.

So, despite his reluctance, it looks like Clinton is going to have to fork over some financial paperwork so that a fair determination can be made regarding how much spousal support Stephanie is entitled to. If he fails to do so, looks like some pretty hefty sanctions may be in his future.

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