Recently in Divorce Finances Category

Questions to Ask Yourself Before Filing for Divorce

August 18, 2014

divorce-questions.jpgThinking about or talking about the possibility of divorce is very different than actually taking affirmative steps to file for divorce in Family Court. Moving forward with this step can take a significant amount of mental and emotional strength. If you're still in the thinking or talking stages of a potential divorce, ask yourself the following questions to help determine if you are ready to take the next step and file for divorce from your spouse.

1. Are you Facing a Hard or Soft Problem?
The need for a divorce may be more immediate if you are in a situation where you are facing a "hard problem" as marital therapists like to call it. "Hard problems" include situations in which you are facing abuse from your spouse or your spouse has an untreated addiction. If this is the case, you may want to act fast and stop just dwelling on the possibility of divorce. However, if you are facing a "soft problem" maybe you need more time to decide if you and your spouse can work on the problem or if a divorce is the preferable option. "Soft problems" include things such as feeling as if you've grown apart from your spouse, that you're unhappy in the relationship or that you aren't in love anymore.

2. Are You and Your Spouse Even Compatible?
What are your odds of succeeding as a married couple? Perhaps taking a "Rate Your Mate" quiz (http://www.divorcenet.com/interest/rate-mate-compatibility-divorce-test.htm) will help you determine if you're destined for doom, in which case you might as well just go ahead and prepare those divorce papers. The "Rate Your Mate" quiz tests areas such as common interests, money, mutual respect and personal safety, which are common issues that many couples face.

3. Should You Stay Together for the Kids?
There are two opposing schools of thought: 1) stay together because divorce is destructive to children; or 2) get a divorce because if the parents are happier the children will ultimately be happier. If you are contemplating divorce and you have children with your spouse then you should think about whether it's in your children's best interest if you stay with your spouse or split. Many couples prefer to wait until their children have turned 18 and left for college before they decide to get a divorce. But if your children are young, this might not be a realistic option for you. Also, if your marriage is filled with havoc and constant fighting then staying together for the kids might actually be hurting, rather than helping your kids.

4. Are You Ready to Part With Some of Your Stuff?
Your house, your cars, your furniture and furnishings...these are all things that were likely acquired during your marriage and will be subject to division during a divorce. Getting a divorce means parting with some or all of these "things" in order to divide assets with your spouse. For instance, in many divorces, where one party cannot afford to keep the home and "buy out" the spouse, the family home will need to be listed for sale. Even though you can likely negotiate with your spouse to keep certain items or assets, you will need to accept the reality of parting with some of your stuff. If this idea seems too traumatic for you then you should re-evaluate whether or not a divorce is the route that you want to take.

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The Uncovered Secrets of Saving Money in a Divorce

August 11, 2014

saving-money.jpgAs a family law litigator, I see on a first-hand basis how much clients are shelling out just to get a divorce. The entire process can very quickly take a dramatic toll on someone both financially and emotionally. In today's economy, most of us don't have unlimited funds set aside to spend on a divorce. Instead, we would rather save our pennies for our children's college education, our retirement, our mortgage, paying off student loans, etc. If you are in this situation, consider the little-known secrets below from an attorney's perspective to help you save money on your divorce case.

Organize Your Documents for Your Attorney:
Often times, clients will just drop off a pile of documents that we have to sort through and try to make sense of. Keep in mind that your lawyer will never know your life as well as you do. So make it easier on your lawyer by providing him/her will a three ring binder with tab dividers and make a tab for each of your assets and their supporting documents. This will allow your lawyer to draft your declarations of disclosure much quicker and will reduce the amount of times your lawyer has to call you to get additional documents and information.

Don't Use Your Lawyer as a Therapist:
Sending lengthy emails to your lawyer about non-relevant legal matters or talking on the phone with your lawyer for hours about your situation will only serve to rack up your attorney fees. Unless it's truly relevant to your case, don't copy your lawyer on emails between you and your spouse. And think about getting a therapist to talk to instead of your lawyer. Chances are your therapist's hourly rate will cost much less than your lawyer's.

Email Your Lawyer Instead of Calling or Meeting in Person:
Most divorce lawyers charge an hourly rate. If you call your lawyer, he/she likely won't be available immediately and will instead need to schedule a phone call for a later time. Chances are that preparing for and taking the phone call will take more time than simply responding to an email. Same thing goes for meeting in person. If you just have a few simple questions that need to be answered, a quick email will likely take less time for your lawyer to review and respond rather than meeting with you in person.

Talk to Your Spouse:
It may seem impossible to talk to your spouse if you are amidst a heart-wrenching divorce. But if you can figure out a way to amicably talk to your spouse you will have a chance to settle smaller issues, like the division of household furniture or your frequent flyer miles, without accruing more attorney fees.

Separate Panic from a True Emergency:
Think about whether your situation truly warrants a phone call to your attorney. Perhaps a phone call to the police would better serve your interests. Or if it's 4:00 pm on a Friday and you know that your attorney won't be able to go to court or get ahold of opposing counsel, perhaps you should wait it out.

Choose Your Lawyer Wisely:
Choosing the right lawyer can make all the difference in your divorce case. You want to choose a lawyer who will see you as a valuable and important client at the firm. Hiring the biggest firm in town might cause you to get your case ignored if you don't fit or exceed their client profile. Also, keep in mind that a lawyer who practices exclusively in family law and is a certified family law specialist will likely have more knowledge about the divorce process than a lawyer who just does family law on the side.

Unless Truly Necessary, Avoid Changing Lawyers Mid-Divorce:
If you change lawyers mid-divorce, your new lawyer will have to charge you to review your file and try to catch up, which will likely cost you a considerable amount of money that could have been avoided by just sticking with your original lawyer.

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Statutes of Limitations between Spouses

July 16, 2014

statute-limitations-01.jpgPrior to marriage, it is not uncommon for people to incur debts or obligations to their significant others. For example, in a long term relationship a boyfriend might loan his girlfriend money for a down payment on a new car or money for car repairs. If the couple cohabitates, the couple might have an agreement that the girlfriend will pay all of the household expenses while her boyfriend attends school full time. In another common scenario, a couple agrees that one of the parties will lend the other money for tuition. Significant others can also incur debts to each other by one party providing professional services to the other such as legal or tax preparation assistance. As long as an agreement exists for repayment (either orally or in writing) and other contract requirements are met, the parties have entered into an enforceable contract.

What happens to a debt or obligation between significant others if the parties get married? During marriage all earnings, accumulations, and liabilities acquired by either party during marriage are community property. However, in general, all property (and liabilities) acquired prior to marriage is the separate property of the acquiring spouse. A pre-marriage debt owed by one spouse to the other is by default a separate property receivable for one spouse and a separate property obligation of the other. According to California statues and case law, a pre-marriage debt between spouses is not extinguished by marriage. This means that after separation, the lending spouse may collect the debt from his or her spouse.

statute-limitations-cash.jpgEven if a pre-marriage debt between spouses survives marriage, what happens if the marriage lasts longer than the statute of limitations on collections? In civil cases, a lender generally has a limited period of time to collect money owed to him or her from a debtor. Typically, statutes of limitations range from two to three years depending on the particular cause of action. Because a significant number of marriages last longer than two to three years, the statute of limitations on collection of a pre-marriage debt may expire before the parties seek a divorce. However, California courts have carved out specific rules regarding debts owed between people who get married. In California, the statute of limitations on debt collection is tolled (is put on pause) from the date a lender and debtor get married through the date of separation.

There is an important distinction in this area of law between couples who are married and couples who merely cohabitate. Because California does not recognize any form of common law marriage, couples must legally marry to toll any pending statutes of limitations on debt collections. If a couple cohabitates, all standard statute of limitations will still apply.

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Securing Spousal Support with Life Insurance

July 10, 2014

spousal-support-insurance.jpgSpousal support is typically a contentious aspect of many divorces here in San Diego. Many divorcing couples spend a lot of time litigating the amount of spousal support to be paid by one party to the other. However, once the parties have settled or the Court makes a decision regarding the amount of spousal support, the party receiving the spousal support should also consider securing future payment of spousal support through a life insurance policy.

California Family Code Section 4360 specifically gives the family law court authority to order the supporting spouse to maintain life insurance on his/her life for the benefit of the supported spouse. The purposes of the life insurance is to ensure that the supported spouse will not be left without means of support in the event that the spousal support is terminated by the death of the party who has a continuing obligation to pay spousal support.

If you are the supporting spouse, you likely won't want to be ordered to purchase and maintain life insurance for the benefit of your ex-spouse because then your ex-spouse will essentially "benefit" from your death. This can be a very unsettling feeling, especially in high conflict divorces where the supporting spouse is already bitter about paying spousal support.

spousal-support-check.jpgThe amount of insurance provided pursuant to Family Code Section 4360 should relate to the actual amount of the spousal support obligation the supporting party was ordered to pay and the length of said obligation. A present value calculation as well as any potential tax savings (as a result of receiving the life insurance proceeds instead of taxable spousal support) should be considered in determining the level of life insurance to be maintained.

If you are the supported spouse, then it would behoove you to stress to the court that you want your ex-spouse to be ordered to maintain life insurance for your benefit. You will also want to make sure that the policy benefits are adequate and to that you are listed as the beneficiary of the policy so that you receive payment in the event of your ex-spouse passing away. Securing spousal support with life insurance may be very necessary for you to maintain your lifestyle or be able to support your children when your ex passes away.

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Agreements Regarding Payment of College Expenses in Divorce Judgments

July 9, 2014

college-expenses.jpgIn a divorce where the parties are fortunate enough to have the funds to pay for their children's college expenses, paying for college can be a major issue of discussion throughout the case. One parent may even give in on other issues to secure an agreement from the other side to pay for tuition for college for the parties' children. However, San Diego family law attorneys have struggled with the enforceability of provisions in Divorce Judgments reached by agreement of the parties. In a recent California Court of Appeal case, the Court clarified the limits of agreements for one or both parties to pay for college expenses.

In Drescher v. Gross, the parties entered into a Marital Settlement Agreement ("MSA") in which they agreed to equally share their three children's future college expenses. The college provision contained limitations on what schools the parties would pay for and which expenses were covered by the agreement. At the time the parties executed the MSA they were both employed as attorneys and earning six-figure incomes. Ten years later, the parties both requested modification of various support provisions, including the college expenses provision. At the time of the post-judgment requests, Husband earned more than $400,000 per year and Wife had become permanently disabled and was unable to work.

college-expenses-dollars.jpgAt the trial court level, the judge enforced the college expense provision of the parties' agreement and agreed with Husband that the parties should share equally the college expenses regardless of their current respective incomes. The trial court determined that it did not have jurisdiction to modify a contractual obligation entered into freely by both parties. On appeal, the Court of Appeal disagreed. The Court of Appeal granted Wife's request to modify the college expense provision based on a material change in the parties' financial circumstances. The Court of Appeal analogized the college expense provision to general support provisions which are modifiable unless the parties state otherwise.

Based on the outcome of this recent case, moving forward in divorce cases, the parties' MSA must specifically state that a college expenses provision is non-modifiable if they intend to restrict the court's ability to modify such a provision. Although family law attorneys dispute the wisdom of this decision, everyone can agree that clarity is always a plus when it comes to drafting and enforcing agreements in the family law arena.

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What Can I Do if My Spouse Lies About His or Her Income?

May 27, 2014

hidden-income.jpgIt is a common fear in family law cases that one spouse will lie about his or her income in order to avoid a high child support or spousal support order. This can become a serious concern if the spouse is self-employed or a business owner who can manipulate evidence regarding his or her income. Especially in the case of a long-term marriage, the parties believe they can make a good approximation regarding the income of their former spouse. Often, spouses are shocked when they receive a copy of the income and expense information form prepared by the other party. Although there may be a disconnect between what you believe your spouse earns and what your spouse is telling the court he or she earns, it is important to do your due diligence and investigate your suspicions before making accusations to the court.

The first thing you can do to find out if your spouse is really lying about his or her income is to conduct formal and informal discovery regarding your claim. Informally, you can begin gathering documents which can provide you and your attorney with a snap shot of the monthly family spending. Review bank statements and credit card statements for information regarding how much money your family spends each month to maintain your current lifestyle. Once you have gathered documents which can provide you with information regarding your monthly family expenditures, you and your attorney can compare that information to the gross income your spouse is claiming he or she earns. In addition, you can gather joint tax returns and financial documents for previous years from your CPA or through your online tax service. It is helpful to compare prior tax returns with your spouse's current claims regarding his or her income.

hidden-income-puzzle.jpgFormally, your attorney can propound demands for production of specific documents and requests for specific information. If you do not believe your spouse will be truthful, even under oath, your attorney can subpoena various entities which have relevant documents in its possession. If you determine that your spouse's statements regarding his or her income are inconsistent with the evidence which has been acquired, you may have a cause of action against your spouse for breach of fiduciary duty. San Diego family courts impose a strict duty on spouses to disclose all material facts and information regarding income, expenses, assets and debts. If one spouse is not truthful with the other party and/or with the court he or she may face serious financial or criminal penalties.

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Tax Deductibility of Lump Sum Spousal Support Payment

May 19, 2014

alimony-spousal-support.jpgIn California divorce cases parties often overlook the tax treatment of their proposed actions when negotiating settlement agreements. A husband might say, "I will pay you more spousal support than child support because our child is turning eighteen (18) soon and child support will terminate." A wife might say, "I will pay you $100,000.00 if you just waive your right to spousal support." In order to compromise an attorney might propose, "Let's start with a high spousal support amount for the first year and step the amount down as time goes on." However, family law litigants should think carefully about these proposals because they all contain hidden tax consequences.

In a recent post-judgment modification case, Alice requested an increase in the amount of monthly spousal support she received from her former husband, John. The parties reached an out of court settlement and John agreed to pay Alice a lump sum payment of $350,000 in exchange for her agreement to waive any future right to spousal support. After the parties formalized their agreement, John paid Alice $350,000. As John was used to deducting his monthly spousal support payments on his tax returns, he deducted the $350,000 spousal support payment on his return the following year. The IRS disallowed all but one month's worth of spousal support as a deduction for John. On appeal, the tax court held that a lump sum settlement of future spousal support was non-deductible because the obligation to make the payment would not have expired in the event of Alice's death.

Generally, Congress draws a clear line between child support, spousal support, and property settlements in order to ensure that parties can only deduct payment of spousal support. Further, Congress has structured the law to ensure parties cannot structure property settlements that are disguised as spousal support. As is evident in this dramatic example, the ability to deduct $350,000 of spousal support versus being barred from such a deduction results in a radically different amount of money paid out-of-pocket. On the other side of this case, Alice received $350,000 in non-taxable spousal support which otherwise would have been taxed to her at her normal rate. Alice received substantially more net income than she otherwise would have.

alimony.jpgIn sum, taxation and family law is a complicated crossover of two different areas of law. Your property and support agreements may involve serious tax implications and therefore, it is always advisable to consult with a knowledgeable family law attorney regarding your divorce issues.

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Bankruptcy and Divorce in California

May 13, 2014

beach fence.jpgIn every California divorce proceeding, both parties must take a good hard look at their joint and individual finances. This is because, at the outset of the divorce process, both parties are required to provide an exhaustive list of all assets, debts, income and expenses. This aids in the division of property and determination of support. However, sometimes once all the facts are laid out in black and white for the parties, they realize that they have much more debt than they originally thought. If the parties' financial situation is dire enough, one or both parties may file bankruptcy.

If you are going through a divorce and are considering filing bankruptcy it is important to discuss this decision with both a bankruptcy attorney and a certified family law specialist. Together, these professionals should be able to give you all of the information necessary to make the decision regarding whether to file for bankruptcy or not. If you decide you would like to file for bankruptcy, you should consider the timing of your filing and the effect it will have on your divorce case.

Once a party to a divorce action files bankruptcy, the bankruptcy case operates as a stay to all proceedings regarding the division of community property that is the property of the bankruptcy estate. The stay does not operate to prevent proceedings to collect, modify or enforce child and/or spousal support payments against current income. Further, the divorce proceeding itself is not stayed. However, a dissolution proceeding cannot be completed until all property is divided. If property division is stayed pursuant to an ongoing bankruptcy case, the resolution of the divorce case will likewise be stayed.

If a divorce judgment is entered in violation of a bankruptcy imposed stay of proceedings, the divorce judgment is still valid. However, the divorce judgment will have no legally binding effect on the bankruptcy case. The divorce judgment is effective and binding as between the parties but has no legal effect on the bankruptcy authorities. The bankruptcy court does have the option to deflect jurisdiction to the family court to establish the character or title to property held in the debtor's estate. Unless and until the bankruptcy court deflects such jurisdiction to the family court, the property of the estate will be controlled by the bankruptcy court. In the context of a post-judgment motion or case where the parties to a family law matter were never married, filing bankruptcy does not stay a request to establish or modify child or spousal support.

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Is My Credit Doomed During a Divorce?

May 8, 2014

Financial-tug-of-war.jpgIt seems like we all spend so long trying to build good credit over the years just for it to be ruined with a snap of the fingers. A divorce doesn't have to be the culprit in ruining your credit. If you take certain measures while going through a divorce, you can help protect your credit rather than sending it and your financial future to its demise.

Review Your Credit Report
The first step in protecting your credit is to get a copy of your credit report. Once you have a copy of your report it is important to thoroughly review it so that you are well aware of all individual and joint accounts. Perhaps you forgot about a department store credit card that you opened quite some time ago. Reviewing your credit report will get you up to speed on all of your accounts.

Closely Monitor Joint Accounts
financial-credit-cards.jpgAfter reviewing your credit report and refreshing your memory of all of your accounts, the next step is to closely monitor them, especially the joint accounts. During or after the divorce, transferring or closing accounts might not occur as quickly as you hope. During this time, it is important that you monitor those accounts closely and catch any missed payments (even if your ex-spouse has agree to make the payment) before your credit gets damaged. If you can't access the account statements online it would behoove you to request the lender to send you a copy of the account statement each month.

Be Budget Savvy

During a divorce, many people tend to feel like they are drowning financially, either due to various expenses related to the divorce or from frivolous spending habits as a result of the emotional affect that divorce tends to have. The best thing to do in order to tackle the financial woes associated with divorce is to create, implement and track a post-divorce budget that takes into account your income and all of your expenses. Being budget conscious will help you to not allow your expenses to exceed your income and hopefully leave you with a whole lot less debt.

Be Mindful of Authorized Users on Credit Cards
After reviewing your credit report you will be able to note which accounts your spouse is listed on as an authorized user. Being listed as an authorized user means that the person has permission to use the credit card to rack up charged but that he or she is not responsible for paying the bill. This is different than joint credit in which both parties are responsible for paying. If you notice that your ex-spouse is listed as an authorized user, it might be worth it to give the credit card company a call and remove his or her name to avoid any additional problems.

Although divorces can be extremely emotionally draining and time consuming, it's crucial to your future that you do not to push your finances to the back burner. Being proactive about managing your credit during your divorce will surely help you post-divorce.

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I'm a Woman, I Won't Pay Child Support, Right?!

May 6, 2014

"Real Housewives of Beverly Hills" star, Brandi Glanville, shared with the world on twitter that her ex, Eddie Cibrian, who is now married to singer LeAnn Rimes, is allegedly asking her to pay child support for their two kids. But could this even be a possibility? Word on the street is that men are the only ones on the hook for child support after a divorce. Well, try again. Being a woman isn't the "easy card" out of paying child support.

women-child-support.jpgCalifornia divorce attorneys are actually seeing an increase in the number of women who are required to pay child support to their ex-husband. This growth represents an apparent reversal of traditional divorce roles and may seem shocking to some people. However, in the last few decades there has been a shift in society where we are seeing more women working, landing high-paying jobs and achieving great success in their careers. Consequently, more women are being labeled as the primary breadwinner in their marriages rather than their male counterpart. More fathers, on the other hand, are acting as the primary caretakers of the children. As a result, more women are financially exposed to be on the hook for child support if the marriage results in a divorce. Child support orders are reflecting these changes by showing an increase in women being ordered to pay child support.

So what exactly is child support? Child support is money that a court orders a parent to pay each month, which is intended to help cover the child's living expenses, including food, clothing, medical care, education, etc. In California, every parent has a duty to financially support his or her child. If the parents cannot agree on a child support amount, the court will make a child support order. In California, the court typically bases its decision on an established guideline calculation. In fact, Family Code Section 4052 provides that the court may only depart from the statewide uniform guideline under special circumstances.

women-owe-child-support.jpgCalifornia family courts consider two main factors when calculating child support: 1) the percentage of time the child spends with each parent (i.e. the "timeshare") and 2) each parent's income. However, there are many other factors that might impact the child support calculation. These include the number of children the parents have together, the tax filing status of each parent, health insurance expenses, mandatory retirement contributions or union dues, support of children from other relationships, and other costs. Consideration of all of these factors is not one-sided, in that they aren't only considered in favor of the mother. Rather, if the father is the custodial parent and the mother is the breadwinner, it is quite likely that the mother will be required to pay the father child support for the children.

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Reasons to File for Divorce in the New Year

April 28, 2014

new-year-divorce.jpgJanuary is often referred to as "Divorce Month" because of the high influx of divorce filings. Many people look at the New Year as an opportunity for a new, fresh beginning. To many, this may mean more time at the gym, less sweets, or even an honest attempt to quit smoking when the New Year comes around. But for others it means "divorce", or in other words, an opportunity to finally get rid of the baggage from last year that has been weighing them down. Although this might not be the first thing you think of when coming up with your New Year's resolutions, it actually might be a good idea to think about filing for divorce in January. Here are some good reasons to think about putting "Get a Divorce" on the top of your New Year's resolution list.

It's Easier on the Kids: waiting until January to file for divorce will likely be much easier on the kids than doing it in November or December. The last thing your kids want to hear during the holidays is that their parents are splitting. Nothing like being a Scrooge and taking away their holiday cheer. This might even cause them to associate what should be a happy time of the year with something very negative for them. Instead, let the holiday spirit carry you through December and into the New Year if possible before filing for divorce. On another note, you might also appreciate avoiding being hounded with questions or by family members who are visiting during the holidays.

It's Easier on You: November and December are often busy months for many people. They are typically filled with wrapping gifts, baking and spending time with children over their school break. Filing for divorce during that time might prove to be extraordinarily difficult because your divorce attorney will want lots of information from you to begin paperwork. Attending to your divorce paperwork will probably be on the bottom of your to do list. So why not wait until January when all the decorations are put away, the kids are back at school, and your head is clear enough to focus your time and energy on your divorce. Beginning this process in January will give you plenty of time to hopefully get things settled and adjusted before the next holiday season rolls around.

Easier to get into court: the courts tend to be jam-packed right around the holidays due to emergency custody disputes. So if you can wait to file for divorce until January you will have a much easier time getting a court date if need be.

gavel-money.jpgFinancially Easier: Filing for divorce in January might be more feasible because typically people receive a holiday bonus check at the end of the year. Since divorce can be quite expensive, having those extra funds available in January will help you to get your divorce rolling. On another note, if your spouse is due to get a significant year-end bonus, waiting until after that money is in the bank may help to clarify that you are entitled to a share of it (pending other circumstances, of course).

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Date of Business Valuation - Exceptions for Bad Actors

April 23, 2014

business-valuation-divorce.jpgIn general, family courts disfavor "bad actors" or spouses who take deliberate steps to disadvantage the other party in anticipation of or during a divorce proceeding. Spouses owe each other the highest duties of good faith and fair dealing - even throughout the divorce process. Specific family law codes were enacted to require spouses to be completely transparent with each other regarding their income, expenses, assets, and debts. This same spirit applies to cases involving disputes over the date of business valuation.

It is not uncommon for the divorce process to drag out for months or even years. The length of the process is dependent on many factors including the complexity of the parties' estate. When one or both parties own a business that business will likely need to be valued prior to the conclusion of the case. As a default rule, assets (including businesses) are valued as close as possible to the time of trial. In a particularly long divorce case, the business may have a substantially different value at the parties' date of separation as opposed to the date of trial. One way for a spouse to overcome the general presumption that a business should be valued close to the date of trial is a showing of "bad behavior" by the other spouse.

Failure to Cooperate in Discovery: In divorce cases, family court encourage open discovery of information and documents regarding all assets, including businesses. If the spouse managing the business fails to cooperate in producing pertinent business records the court may decide to value the business at the time proposed by the other spouse. Spouses are not permitted to benefit from confusion intentionally caused regarding the facts of the case.

Commingling Business Operations and Poor Record Keeping: California family courts have also selected an alternative date of valuation in cases where the spouse managing a business so intertwined pre and post-separation operations in poor record keeping that it was impossible to determine the date of separation value even though the court otherwise would have done so.

Breach of Fiduciary Duty: As stated above, spouses owe each other the highest duty of good faith and fair dealing. A violation of that duty can result in a date of valuation aimed to punish the offending spouse. For instance, if a spouse mismanages a business he or she may have to brunt the consequences of the mismanagement entirely as a result of the date of business valuation chosen by the court. California courts have also held that neglecting fiduciary duties could be grounds for an alternative date of valuation.

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One Day Divorce - Is it Really as Good as it Sounds?

April 17, 2014

one-day-divorce.jpgOn March 1, 2014, the San Diego Superior Court began offering a "One Day Divorce" option at the San Diego's Downtown Family Court. This pilot program provides the option for eligible parties to complete their entire divorce is just one short day. Sounds pretty amazing, right?!

The goal of the program is for parties to walk out of the courthouse with their judgment papers in hand. Parties first meet with a family law expert to go over the terms of their proposed divorce settlement or the process for a default judgment. Then the parties will receive hands on assistance with completing any forms necessary to finalize their divorce. If all of the forms are completed, the parties may appear in court that same day to receive their final judgment.

Offering an extremely fast and affordable resolution to the otherwise typically lengthy divorce process is what the "One Day Divorce" program aims to do. This seems like quite the innovative option. But it inevitably comes with some pitfalls. For starters, those impacted by the new program won't be as widespread as one would think. Rather, eligible parties are limited only to those who have already filed a petition for divorce or separation in San Diego County at least six months ago, are self-represented, have served the summons and petition on the other party, a proof of service of summons or a response has been filed with the Court, and there are no contested issues. In addition, if either spouse has retirement benefits that were earned during marriage, such benefits must be listed on the petition or response in order to be able to complete the judgment. These limitations narrow down the pool of eligible couples dramatically.

On the other hand, the "One Day Divorce" program doesn't appear to be as limited as the eligibility requirement for a summary dissolution. Unlike summary dissolutions, the "One Day Divorce" program's parameters are not limited to couples who have been married less than five years, have no children of the marriage, do not have any interest in real estate, do not have debts over a specified amount, do not have community assets over a specified amount, agree to waive spousal support, etc. This means that cases involving long-term marriages, spousal support, custody, high assets, etc. may take part in the program. However, such cases may be quite complex and perhaps a "one day divorce" approach wouldn't serve the best interests of the parties. Rather, they might be better off with legal representation to ensure equal bargaining power and knowledge between the parties. Also, the appropriate amount of time and expertise to review all aspects of their divorce might be necessary to ensure that the parties fully understand their situation and have sufficient time to received legal advice before settling.

In any event, the success of the "One Day Divorce" program will heavily depend on its execution. For instance, the "family law expert" that will meet with the parties during the One Day Divorce process poses potential concerns. What will this person's limitations be? Will he/she act as a mediator or give legal advice? Is he/she a licensed and experienced divorce attorney? If the program's intent is to solely help parties who have reached agreement on every single aspect of their divorce and either don't have any further questions or are not able to get legal advice at or during the one day process then perhaps the program will indeed have potential for those truly uncontested cases. But, if the family law expert's role is to give legal advice then that would likely be another story.

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Protect Your Finances in Divorce

April 15, 2014

protect-finances-divorce-001.jpgOne of the top concerns for the majority of family law litigants is protecting their financial well-being during the divorce process and beyond. Typically, all divorcing parties must make changes to their lifestyle in order to stretch their family budget enough to support two separate households. The reality in most divorces is that both parties will need to make financial sacrifices and cannot afford to maintain their previous standard of living. However, beyond lifestyle adjustments, most parties also have a real fear that their assets and potential income are in jeopardy as a result of the divorce. If you are worried about protecting your finances in divorce, below are a few tips to consider which prevent future loss.

Create Financial Separation after the Date of Separation

The marital estate exists from the date of marriage through the date of separation of the parties. All earnings and accumulations of the parties (except through gift, devise or bequest) during that time is community property and are shared equally between the parties. After the date of separation, the income of both parties becomes their separate property. Thus, if the primary earner contributes to the support and maintenance of an unemployed spouse over and above the amount required by a support order, the supporting party may request reimbursement. In cases where the parties continue to commingle their spending it can be difficult to later asses how much support has been paid post-separation. It is a good idea to consult with a family law attorney regarding whether you should establish your own checking, savings, and/or credit card accounts.

Learn What you Don't Know

In a typical divorce case, the parties have the most knowledge regarding the particular assets and debts in their own names. While you and your spouse are still amicable and living under the same roof, it is highly advisable to gather information and documents regarding the assets and debts you are not as familiar with. In addition, it will also be helpful to discover as much information as possible regarding the family expenses paid by your spouse and his or her income. Learning what you do not know prior to a nasty divorce can save thousands of dollars in attorney fees and costs and can also prevent significant delays.

Focus on the Facts of the Case - Not Revenge

Vengeful-minded litigants spend significantly more money in attorney fees and costs than they will likely ever recover from their spouses. Further, vengeful tactics tend to prolong the divorce process making it harder for the parties to move on with their lives and establish emotional stability. In addition, California is a "no fault" state which means that marital wrongdoing is completely irrelevant in family law proceedings.

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Spring Cleaning and Your Divorce this Tax Season

April 14, 2014

spring-cleaning-and-divorce-001.jpgDuring this time of year many people get motivated to clean out their closets and clean up their finances. If you are considering pursuing a divorce this year, you will also want to consider using some of that "spring cleaning" energy to prepare for the changes to come. There are a lot of small steps potential family law litigants can take in order to make the divorce process run more smoothly and affordably.

Get your financial documents in order

With tax season in full swing, there is no better time to collect and organize all of your financial documents. Sit down with your spouse and figure out what each of you earns and how much the family spends each month on living expenses. In addition, discuss all of your joint and separate assets and debts. Collecting documentation on these topics such as income, expenses, assets and debts will save you substantial time and money in the divorce process. At the outset of every divorce case, both parties are required to set forth all material facts and information regarding their finances. Gathering these documents and information ahead of time will jump start your case.

Check into your credit score

In order to start a separate financial life from your spouse you may need to obtain your own loans and credit cards. If there is an error in your credit report, it is better to address it before your potential new creditors discover it. Typically repairing your credit can take a significant amount of time. If you are newly divorced, you will likely need credit immediately for a potential refinance, purchasing your own vehicle, or starting a line of credit. Therefore, it is always a good idea to check your credit sooner rather than later.

Get credit cards and bank accounts set up in your name

One of the most expensive and fruitless endeavors in a family law case is the issue of credits/reimbursements for post-separation expenditures. Once you and your spouse have separated, it is much cleaner for the both of you to begin using separate bank accounts and credit cards. If you untangle your finances at the beginning of the case, you can avoid analyzing mountains of paperwork attempting to decipher who spent what post-separation. If your spouse is not aware that you will be filing for divorce, it is advisable to open new accounts with different entities than the ones which hold your current joint accounts.

Begin to process your emotions

Divorce is an extremely emotional process for a majority of parties. However the process of divorce should be logical and analyzed from a financial standpoint. In order to separate your emotions from your financial decisions, you might want to begin processing the idea of divorce early. If helpful, begin speaking with a licensed mental health professional to deal with your emotional needs. Venting to your divorce attorney about marital discord is less useful and much more expensive than a weekly therapy session.

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