Articles Posted in Discovery

Elvis

On June 13 Lisa Marie Presley filed for divorce from her fourth husband, Michael Lockwood. While Lisa Marie isn’t the only star we’ve written about to go through multiple divorces, her specific case highlights a common and sometimes very complicated issue in divorce which occurs when one spouse has taken control of the finances and the other has little to no involvement in financial matters (the so-called “out spouse” is the one who stayed out of financial matters during the marriage).   Continue reading

Hidden-Assets

We’ve been hearing a lot about the “Panama Papers” lately; the leak of millions of documents out of the Panamanian law firm Mossack Fonseca disgorging details of the firm’s wealthy clients hiding money via shell companies in various tax havens. Among those allegedly involved are world leaders, athletes, celebrities and businessmen.

As divorce attorneys, it is not uncommon that our clients are convinced that their spouse is hiding money. Continue reading

disclosure-divorce

The State of California imposes very broad duties of disclosure between spouses that are in the midst of a divorce. Inevitably, a spouse will try to cut corners or try to defraud their spouse altogether in an attempt to get an edge in the divorce case. The Family Code has built-in provisions that severely punish or otherwise disincentivize this kind of behavior. We will talk about a few of these provisions below.

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lottery-divorce

Last week’s $1.5 billion Powerball jackpot created a frenzy like no other as people rushed out to buy their tickets for a shot at riches, the likes of which most of us can’t even fathom. There is no doubt that the frenzy and constant discussion of the billion dollar jackpot left each and every one of us daydreaming about what we would do if we were to stumble our way into such a large fortune. Of course we would pay off our debts, help out friends and family members, buy some cool new things…but did we consider the other not-so-pleasant effects that a lottery win so substantial might have on our lives? Perhaps after reading this, you won’t feel as bad that you weren’t one of the big winners!

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discovery-family-law-divorce.jpgOnce initial papers are filed to get the divorce process started (the petition and response) the next step is typically to gather all pertinent information regarding each spouse’s financial and personal information. Although both parties are required to prepare and serve declarations of disclosure, which outline each party’s income, expenses, assets and debts, discovery is usually a necessary tactic to gather additional information.

Discovery is vital to the divorce process because it allows both sides to examine exchanged information and documentation before determining how to properly divide up assets and debts. Revelations made during the discovery process are also helpful in calculating the appropriate amount of child support and spousal support.

Discovery can occur informally, formally or both. Informal discovery is when the parties and their attorneys simply request specific information or documentation in an email or letter to the opposing party/opposing counsel. Informal discovery indicates that the parties are willing to work together, but simply need more information to move forward in the case.

Formal discovery, on the other hand, typically indicates that the party is more litigious because formal discovery requires that opposing party and opposing counsel follow rigid procedures and timelines in responding to the discovery requests.

Discovery, whether formal or informal, may include some or all of the following: Interrogatories, Requests for Admission, Document Production and depositions.

  • Interrogatories are written questions from one spouse to the other that must be answered under penalty of perjury. The interrogatories may relate to any issue that is relevant to the divorce proceeding, such as employment information, details regarding financial accounts and information regarding the party’s health or living situation.
  • Requests for Admission, although not often utilized in family law, can be helpful when you need a party to admit or deny specific facts regarding divorce related issues.
  • Demand for Production of Documents are particularly helpful when the so called “out-spouse” does not have access to financial statements, documentation relating to a spouse’s business, tax documents, etc. It also is a way to get important information that a spouse may be trying to hide.
  • Depositions are when an attorney asks the opposing party (or expert, witness, etc.) a handful of questions during a face-to-face interview. Responses are required to made under oath. A court reporter will draft a transcript of everything that is said during the deposition. Depositions are helpful to get important facts out of the other party and also to see how that person will appear and conduct themselves at trial.

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failure-prosecute-wheel.JPGAnyone with access to cable television or the internet probably knows more about the Kardashian family than they know about their own family. The Kardashian clan has broadcast their ups, their downs, weddings, births, break ups and in Khloe Kardashian’s case, her divorce from former NBA star, Lamar Odom. More than 16 months ago, Khloe Kardashian filed for divorce from Lamar Odom amidst allegations of infidelity and drug abuse by the former Los Angeles Laker. And while Khloe appears to have moved on, given her highly publicized romance with French Montana, her divorce case is still pending in Los Angeles Superior Court; at least for now that is.

According to reports, if Khloe does not take further action to pursue her case, the Court will consider dismissing the case all together. Pursuant to California Code of Civil Procedure Section 583.410, “The court may in its discretion dismiss an action for delay in prosecution pursuant to this article on its own motion or on motion of the defendant if to do so appears to the court appropriate under the circumstances of the case.”

Failure to prosecute in the family law arena would consist of one of three time frames. They are:
1. Failure to serve the summons and complaint within 2 years after the action is commenced against the Respondent [Code of Civil Procedure § 583.420(a)(1)];
2. Failure to bring the case to trial within 3 years after the action is commenced against the Respondent [Code of Civil Procedure § 583.420(a)(2)]; and 3. Failure to bring to retrial within 2 years after a mistrial, order granting retrial or reversal on appeal [Code of Civil Procedure § 583.420(a)(3)].

The exception to this rule is when there is a valid support order or custody orders pending. In that case, the court cannot dismiss a divorce case for failure to prosecute. One way to avoid having your case dismissed under Section 583.410 is to bifurcate the issue of marital status and ask the court to terminate your marriage. This means that you are divorced from the other party, but the court must still resolve the financial issues in your case. In this case, the court will not dismiss your case under Section 583.410
failure-prosecute-calendar.jpgIf your case is dismissed under Section 583.410, it will be as if you never filed for divorce in the first place. The six-month waiting period will start over again; you will have to file a new Petition for Dissolution, including paying the filing fee; and will have to perform all of the mandatory disclosure required by statute.
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beach-wooden-posts.jpgDivorce is an emotional time whether or not the split is amicable. These emotions can cause people to make choices they would otherwise never make, such a looking through their former spouses computer or cell phone. Whether the clandestine act is out of sheer curiosity or for a specific purpose, a great deal of information can be learned about a person by looking through their cell phone or computer. This may include bank statements for accounts that were previously unknown, emails, dating profiles, messages to friends about the marriage or a possible affair.

In more extreme cases, one party may put tracking software on the other party’s computer, such as key logger software, to track every move the other party makes on their computer. This could lead to very damaging evidence that would be very helpful in a divorce case.

The problem is you probably cannot use any of the information you obtained, and could end up facing a lawsuit by your former spouse and/or jail time for violation of several California laws as well as Federal laws.

magnifying-glass.pngIn California illegally obtained evidence cannot be admitted as evidence in a court proceeding if the manner in which the evidence was obtained violates the Penal Code. This includes tape recording a conversation without the other party’s consent, eavesdropping on a private conversation, or accessing/recording the contents of another person’s electronic device (computer, phone, etc.) without their permission.

There are two exceptions to this rule:
1. Illegally obtained evidence can be admitted if it comes from another source, or would have been or was discovered independently.
This means if you discovered the other spouse had a previously undisclosed bank account because you broke into their computer and found emails from the bank, but subsequently learned about the secret account when you found a bank statement on the kitchen counter, you could use the evidence.

2. The individual from whom the evidence was illegally obtained waives the right.
This would generally include the other party providing the evidence by way of a response to discovery or in testimony.

There are other ways the evidence can be used, but not admitted at trial or hearing. For example, if the evidence is used to refresh a witnesses’ recollection of certain events. This is because the evidence being used to refresh the witness’s’ recollection is not being introduced; it is simply an aid to the witness to recall an event he/she is testifying about.

Another way illegally obtained evidence can be used is to impeach a witness’s credibility. This means, if the other party testifies that they have no accounts with ABC Bank and Trust, you can use the illegally obtained evidence to prove they do have accounts at ABC Bank and Trust.

A note of caution…just because you may be able to use illegally obtained evidence in your family law matter does not mean the other party cannot file a law suit against you for illegally obtaining the evidence in the first place. Moreover, you may still be subject to an indictment for violations of the penal code for any actions taken to obtain evidence from another party illegally. Remember, illegally obtained information is by definition “obtained illegally.”
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spousal-support-modify-lottery.jpgSpousal support is a hot topic in divorce not only during the divorce process but also after the parties’ divorce judgment has been processed and finalized. We often meet with clients who are currently paying spousal support pursuant to court order and, based on a substantial change in circumstances, would like to request a downward modification of spousal support so they don’t have to fork out so much money each month to their ex-spouse. However, we sometimes also get requests from clients who are the recipients of a spousal support award and would like assistance with getting an upward modification of spousal support so that their ex-spouse actually pays them more each month.

A person currently receiving spousal support pursuant to the initial court order may be inclined to seek an upward spousal support modification if, for example, at the time of divorce the spouse receiving spousal support was making a decent living (and thus the need for spousal support was minimal) but post-judgment that spouse lost their job or has health issues that result in an increased need for spousal support to meet that person’s reasonable needs. Another potential reason that might pique a person’s interest for seeking an upward modification of spousal support includes situations (although quite rare) where the person paying spousal support hits the jackpot on the lottery and arguably now has a much higher ability to pay.

A request for a spousal support modification requires the party seeking the modification to show that there has been a material change of circumstances since the most recent order. The Court will consider whether there has been a significant change in any of the factors set forth in Family Code Section 4320 (the same criteria considered for initial order) when making the subsequent modification order, if any. These factors include, among others, the supporting party’s ability to pay, balance of hardships to each party, and the needs of each party based on the Marital Standard of Living (“MSOL”). The MSOL is the lifestyle enjoyed by the parties during marriage and is typically measured by the parties’ expenditures during marriage, including any funds put towards savings.

spousal-support-modify-arrows.jpgWhile the Court has broad discretion to modify spousal support so long as there has been a material change of circumstances, the Court does not always have jurisdiction to do so. In many cases, spousal support is subject to subsequent modification (or even termination) so long as the spousal support order has not already expired and the court still has jurisdiction over spousal support. However, in accordance with Family Code section 3591(c), if the parties’ judgment has a provision that expressly states that the parties agreed to make the spousal support award non-modifiable, then spousal support cannot be modified post-judgment. In the absence of such an agreement, the court retains jurisdiction to make a decision to increase, decrease or terminate support in a later proceeding (post-judgment) pursuant to a request by one of the parties.

It is also important to note that a post-judgment increase in spousal support being granted by the Court is highly unlikely. While there is nothing that prevents the Court from increasing support, it is simply not very common in California Family Law Courts. And even if the Court is willing to entertain the idea of an upward modification of spousal support, the spousal support award would still be capped at an amount that meets the MSOL. Even if you have an experienced attorney on your side it’s important to have realistic expectations and understand that getting a significant increase in spousal support, or any increase for that matter, is not very common.
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inherited-money-divorce.jpgMost parents want to ensure their children have every advantage and opportunity they can afford to provide to ensure they are successful and happy. Many parents also want to leave a financial legacy for their children after they pass away in the form of trusts or inheritances. These gifts of money or inheritances are fairly straightforward. Under California law, any property received either by gift, bequest, devise, or descent, including the income derived therefrom, is considered the separate property of the party receiving the money. Like I said, it’s pretty straightforward. The complications arise when the receipt of this property or money is commingled (mixed) with community property money. Unraveling the rat’s nest of commingled funds can not only be expensive, but is often impossible. This is especially true when the parties have been married for a long time.
So how can you ensure you keep your inheritance after a divorce? While not bullet proof or exhaustive, the following items can help you to keep this property separate.

Don’t Co-mingle your funds
This is probably the most important thing you can do to ensure that your separate money stays that way. If you expect an inheritance, or received one prior to your marriage, keep that money in a separate account in your name only. Never put income earned during marriage into that account for any reason. Once you comingle community and separate money, you will be required to perform a tracing using a forensic accountant to unravel the transaction. If that sounds expensive, you’re right. Depending on the amount of transaction, and the span of time involved, tracing separate and community funds can costs tens, if not hundreds, of thousands of dollars.

Do a Pre-nup or Post-Nup
A prenuptial agreement (before marriage) and a post-nuptial agreement (after marriage) are one way to define what property or money is separate and what property or money is community. These agreements can be very helpful if a marriage ends in divorce, but they are not fool proof. Even if you have a bullet proof pre-nup, that does not stop the other party from contesting it. Just ask Donald Trump. About Ivana’s challenge to Donald Trump’s prenuptial agreement, Trump wrote, “[w]e needed a bus to get Ivana’s lawyers to court. It was a disaster, but I had a solid pre-nup, and it held up.” More importantly, even with a prenuptial agreement, if you commingle your separate property funds with community property, you could end up spending thousands of dollars just to unravel the mess.

Do an Irrevocable Trust

If you anticipate receiving an inheritance, setting up an irrevocable trust can separate and protect the principal of that inheritance. If the trust pays out income to you, that can still be considered for spousal or child support, but the trust will protect the principal assets and money.

inheritence-live-moderately.jpgLive within your means
In California, using your separate property to pay community property bills is generally considered a gift that you cannot get back. Regular gifts of income from family that are used to pay community bills can also be considered part of the marital standard of living, so be careful how this money is spent. This is not to say that you cannot use your separate property for your family, just know that if you do, it is unlikely you will get it back.

By considering the items above and speaking with a financial planner who specializes in divorce, as well as a qualified family law attorney, you can set in place a plan to protect your separate property assets in the event of a divorce.
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financial-disclosure.jpgWe often blog about the statutory requirement in all California divorces for divorcing parties to exchange complete financial disclosures. The required disclosure documents consist substantially of an Income and Expense Declaration and a Schedule of Assets and Debts. Through the completion of these documents, the parties are obligated to provide all material facts and information regarding their income, expenses, assets and debts. Failure to complete these forms in accordance with the highest duty of good faith and fair dealing may result in severe sanctions imposed by the court. Considering these strict requirements, the California Court of Appeal surprised family law attorneys in a recent case, In re Marriage of Evans, in which it held that the parties could reach enforceable divorce settlements prior to the exchange of the financial disclosure documents.

In Evans, prior to filing for divorce, the parties negotiated and signed a “pre-divorce agreement” which divided their interest in the marital residence. After a Petition for Dissolution was filed, Mr. Evans filed a motion to set aside the parties’ pre-divorce agreement. Mr. Evans argued that the agreement was invalid because the parties did not exchange their disclosure documents prior to its execution. The trial court disagreed with Mr. Evans and held that the pre-divorce agreement was valid and ordered its terms to become part of the Judgment of Dissolution. Mr. Evans appealed the trial court’s decision and lost again. The appeals court held that the financial disclosure statutes only were intended to apply after service of a divorce petition.

pre-divorce-agreement.jpgWith the Evans ruling now a published opinion, there is a loop hole for parties who wish to enter into property agreements prior to exchange of disclosure documents. It is important to note that Evans does not extinguish the requirement for both parties to abide by the disclosure statutes once a divorce has been filed; it only addresses agreements made prior to filing for divorce. In addition, pre-divorce agreements made in contemplation of divorce may be set aside for various other reasons. If you and your spouse would like to enter into a pre-divorce agreement, but are not yet ready to file for divorce, it is important to consult with an experienced family law attorney prior to executing any agreement. The right attorney can help you draft an agreement that will be enforceable in the event of divorce.
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