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Never Look a Gift Horse in the Mouth

bobby-flay-stephanie-march.jpgThe divorce battle between celebrity Chef Bobby Flay and his Wife of a little over 10 years, Stephanie March, have been anything but civil. At the heart of the divorce is a premarital agreement executed by the parties before they said their nuptials. The agreement clearly lays out what Stephanie is entitled to receive with regard to property and support. The jury is still out on whether the premarital agreement will hold up, but that is a blog for another day.

The most recent fight (of which there have been many) revolves around a racehorse named "Dad's Crazy" which Bobby allegedly purchased for Stephanie back in 2009. Stephanie alleges the horse was purchase as a 4th anniversary gift. Apparently the horse was quite successful, raising in excess of $130,000 in winnings, which according to Stephanie, Bobby kept to himself. The horse has subsequently sold for $60,000 and, again according to Stephanie, Bobby kept the sale's proceeds as well.

If you have followed our blog for any amount of time, you will know that any property acquired during marriage that was acquired by way of "gift" is the separate property of the recipient of the gift (Family Code §770). Seems pretty simple, right? Bobby (allegedly) gave the horse to Stephanie as a gift and therefore it is her separate property. It would then follow that the winnings and the sale's proceeds would also be her separate property.

You know if it were that simple I would not be writing this blog. You see gifts between spouses do not work the same as gifts to a spouse from a third party. Gifts from third parties are almost always the separate property of the recipient. I say "almost always" because this is family law after all, and nothing is ever perfectly certain.

When you have a gift between spouses you need to have writing transferring the property from either the separate property or community property of the giver of the gift to the separate property of the recipient for there to be a valid transmutation; which is just a fancy word for changing the character of the property. The simple reason (and yes, I am simplifying this a great deal - I could spend several blogs discussing transmutations) is that you need to be able to prove intent. Generally this comes in the form of a writing of some kind.

The exception to the requirement for a valid transmutation is found in Family Code §852(c) which says:
"This section does not apply to a gift between the spouses of clothing, wearing apparel, jewelry, or other tangible articles of a personal nature that is used solely or principally by the spouse to whom the gift is made and that is not substantial in value taking into account the circumstances of the marriage."

This short code section is the reason why parties, almost without exception, keep their engagement and wedding rings, jewelry, personal property and clothing acquired during marriage. These items are easy to distinguish, because they are specifically mentioned in the statute. The analysis becomes more difficult when you get to the line "or other tangible articles of a personal nature."

This is one of those sentences that absolutely defies a precise definition, but as Justice of the Supreme Court of the United States, Potter Stewart, said when he was asked to describe the threshold test for obscenity, "I'll know it when I see it." That's just it, it will always be a case by case basis.

As an example, in the case Marriage of Buie and Neighbors, Husband argued that Wife's gift of a Porsche given to him for his birthday was his separate property under the exception in Section 852(c). The court disagreed holding that an automobile is not an article of a personal nature within the meaning of the section. Though it probably would not have changed the court's holding, it is worth noting that Husband purchased the car with Wife's separate property as a birthday gift, without first asking Wife if that was okay.

So, how will "Dad's Crazy" be worked out? If I was a betting man (and I am...I was raised in Las Vegas after all), I would bet on the horse being deemed community property, and Bobby will be entitled to recoup any money he put into the horse's purchase. As for the money that was earned by "Dad's Crazy," that will also be community property subject to reimbursement by Bobby. This all assumes there is no provision in the premarital agreement about purchases made during marriage and how they are treated upon dissolution.

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Apparently it is Better to Give Than to Receive

sterling-stiviano.jpgThe Donald Sterling and V. Stiviano saga just won't go away. In a Statement of Tentative Decision released by Los Angeles Superior Court Judge Richard Furin, he ordered Stiviano to return the community property "gifts" she received from Donald Sterling.

According to the decision, which Stiviano is expected to appeal, she must return approximately $2.6 million dollars in cash, cars, and real estate she received from Mr. Sterling. Back before Stiviano leaked the secret recording of Donald Sterling making racist remarks, which ultimately resulted in him being forced to sell the Clippers, Shelley Sterling filed suit against Stiviano for return of these "gifts." Her reason...simple; the gifts Donald made to Stiviano were not his to make. They belonged to the Sterling community, and he had no right to make the gifts.

Shelly Sterling focused her action against Stiviano using Family Law statutes of joint management and control as well as the prohibition against giving gifts to third parties without the written consent of the other spouse. [Family Code Section 1100]. This is a common argument made by one spouse against the other during a divorce action; however I have never seen it made against the third party seeking return of the gift. In the typical case, the spouse who made the unauthorized gift is charged with the value of the gift in the division of the community estate. In this case, Shelly Sterling filed a separate civil complaint against Stiviano seeking return of the gifts on equitable grounds. In either case, the party seeking return of the gifts from a third party or to charge the other spouse with the gift, must prove the amount of the gift, when it was given, and that the other side did not authorize the gift to me made.

Sterling-stiviano-gifts.jpgThe Court found that Shelly Sterling met her burden and ordered Stiviano to return the gifts. [It's important to note, many of the gifts were for cash or cars which Stiviano has either spent or sold, so she will have to come up with the cash to satisfy the Judgment.] As for the house...well that has been transferred to the Sterling Family Trust who is now the legal owner.

This was a unique approach taken by the court; that is ordering the gifts, or their cash equivalent, to be returned by the mistress and not charged to the cheating spouse. The reason is simple; the Sterlings are not divorcing each other and were married during the time period the gifts were made. One important factor, which I will not discuss in this blog, is the Court made a finding that Donald and Shelly were not separated at the time these gifts were made. That was a big part of the Court's ruling. I will be very interested in the opinion of the Court of Appeals on the very novel ruling by Judge Furin.

What does that mean to you as a family law litigant...it means you have another party to seek relief from if you learn your spouse has been lavishing gifts on a third party during a period you were married. This is, at least for now. We will have to see what the Appellate Court has to say if/when Stiviano appeals the Judge's ruling.

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"Your Cheating Hart"

March 24, 2015

cheating-heart-infidelity.jpgActor and comedian, Kevin Hart, whose new movie Get Hard co-starring Will Farrell set to release on March 27th, is on top of the world. It also appears that the feud between Kevin's first Wife and mother of his two children, Torrei Hart, and his fiancé, Eniko Parrish is over. Life for Kevin was not always so rosy. Back in May 2014 Torrei took to twitter slamming the comedian for cheating and blaming the breakup of their marriage, in part, on his infidelity.

Recently, the Wall Street Journal published an article entitled Are You Likely to Have an Affair? According to the article, the "signs" include:


  • Gender

  • Certain ages being more prone to cheating

  • History of past infidelity

  • Dissatisfaction with the current relationship

  • Exposure to potential partners at work

  • Thrill seeking or narcissistic personal traits

While studies vary, statistics suggest that sometime during their marriages, 21% of men and 15% of women are involved at some type of extramarital affair.

In California, evidence of marital misconduct is not admissible, because California is a no fault state. Though not as common as it once was, there are states where evidence of marital misconduct is not only admissible, but is potentially damaging to your divorce case. In some states, if the other party can prove adultery, it can have an impact of spousal support. Despite being a no fault state, the issue of infidelity can still have an impact on your case, both financially and emotionally.

If the injured party (that is the spouse who was cheated on), can prove the cheating spouse used community property money to advance his/her affair, then the Court could find "dissipation" and order the cheating spouse to reimburse the community for money used for the affair. This could include hotel rooms, flowers, gifts, jewelry, dinners and or even vacations. This can be difficult to prove, and in some cases the amount to be recovered may not be worth the cost of fighting. Every case is different, so you should consult with an attorney to decide whether the issue is worth pursuing.

cheating-infidelity.jpgWhether you pursue recovery of the money the other party spent on their affair, you will be faced with the emotional impact of finding out your spouse has cheated. Divorce is by its nature an emotional situation; it represents the end of a commitment made at a time when two people were very much in love. These emotions are only exacerbated when one party learns the other party has been unfaithful. While it is natural to be upset and want to push for punishment or retribution, it is important not to let your personal emotions drive your divorce case. Allowing an emotional response to map the direction of your divorce case can not only be expensive to you, it may impact your children emotionally and will get in the way of you healing and moving on.

An experienced Family Law Attorney can educate you on the legal impact of infidelity and help you determine the best course of action for your case, and not merely as a reaction to the infidelity. No matter the reason for the divorce, coming out of the divorce financially and emotionally secure should be your top priority.

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"Infidelity Clauses" and Celebrity Prenuptial Agreements

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A premarital agreement, more commonly known as a "prenup," is a contract entered into by soon-to-be spouses prior to marriage. Celebrities commonly enter premarital agreements in order to protect any wealth they may acquire during marriage. Where one spouse has the potential to make millions of dollars per year, as is often the case in Del Mar, he or she is incentivized to enter into a contract with his or her spouse clarifying that any money earned during marriage will remain his or her separate property upon divorce. In contrast, under California's default community property laws, each spouse is entitled to one-half of all earnings by his or her spouse during marriage. One of the most highly debated issues in celebrity premarital agreement negotiations and litigation is an infidelity clause.

Learn more about quasi-community property

As divorce attorneys know, all premarital agreements are different, and thus all infidelity clauses are different. However, an infidelity clause generally imposes a financial penalty on one or both spouses if he or she commits emotional or sexual infidelity. Financial penalties may include mandatory cash payouts, increased spousal support, or an unequal division of the marital estate. In order to protect themselves in case of divorce, celebrities couples such as Charlie Sheen & Denise Richards, Sandra Bullock & Jesse James, and Catherine-Zeta Jones & Michael Douglas are rumored to have had infidelity clauses in their premarital agreements. Recently, Elin Nordegren was rumored to have demanded a substantial infidelity clause in a premarital agreement as a condition of reconciling with Tiger Woods.

Ironically, despite the buzz about celebrity infidelity clauses in premarital agreements, infidelity clauses are void in Del Mar and across California. In Diosdado v. Diosdado, the California divorce court found in 2002 that a penalty for infidelity is in direct violation of public policy underlying "no-fault" divorce and thus is unenforceable. Thus far, Diosdado has been continually upheld by all published cases to follow it. The policy behind California's "no-fault" divorce is that a party should not be punished financially for any misconduct during marriage. In contrast, certain circumstances allow some states' divorce courts to look at fault in dissolving marriage, determining support, and dividing property. It would seem to follow that these states would uphold an infidelity clause in a premarital agreement, should divorce become an issue.

Read more about jurisdiction and divorce in California

Considering that thousands of celebrities call cities in California home, it is interesting that so many celebrities are discussing unenforceable infidelity clauses. One explanation may be that only celebrities residing and divorcing outside of California are negotiating infidelity clauses. Gossip magazines also debate whether or not an expensive price tag actually deters celebrities from straying outside of their marriages.

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Vanessa Bryant's Strategic Divorce Move

Superstar basketball player Kobe Bryant is splitting with his wife Vanessa. On December 1, 2011, Vanessa filed a divorce petition in the Superior Court of California in the County of Orange. Like many other rich and famous celebrities, Kobe and Vanessa Bryant did NOT sign a premarital agreement. The Bryants have released a statement revealing that the couple has settled all relevant issues privately including: custody, visitation, property, and support. A judgment will be entered in 2012.

The couple has two young children Natalia, 8, and Giana, 5. Both Kobe and Vanessa are asking for joint custody of their daughters. According to the filing, the couple will share both legal and physical custody. It seems like Kobe and Vanessa will not litigate any issues in their divorce.

Ironically, the couple celebrated their 10-year wedding anniversary on April 18, 2011. In 2004, Kobe was accused of sexually assaulting a woman in Colorado. Throughout the entire investigation and trial, Vanessa stood by his side and supported the position that the alleged sexual assault was consensual. Vanessa admitted that Kobe made a mistake by committing adultery but refused to acknowledge any more of the woman's claims. Rumors have surfaced that Vanessa saw divorce lawyers and almost served Kobe with divorce papers in 2004. A source close to the couple commented: "Vanessa almost threw in the towel four years ago. Kobe always had a slew of girlfriends, and the cheating was almost blatant."

Despite Kobe's public (alleged) infidelity that continued into the years following 2004, Vanessa stayed in her marriage before suddenly filing for divorce in 2011. Vanessa was likely counseled in 2004 regarding the likely outcomes of a potential divorce case and her options. Under California law, a marriage of 10 years or more is a presumptively a long-term marriage. Having a long-term marriage entitled Vanessa to many advantages in a divorce proceeding. California Family Code section 4320 lists the factors a court may consider in awarding spousal support. Under section 4320(l) the goal of the court shall be that the supported party shall be self-supporting within a reasonable period of time EXCEPT in the case of a long-term marriage. If the marriage is not long-term, a "reasonable period of time" is generally one-half the length of the marriage. Therefore, if Vanessa had filed for divorce in 2004 she would likely be awarded spousal support for around 3 years. Now that the 10-year mark has passed, Vanessa may be entitled to permanent spousal support.

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Schwarzenegger Case Illustrates Issues of Marital Property, Child Custody, Alimony in San Diego Divorces

FOX News and other media outlets continue to report that the divorce of Arnold Schwarzenegger and Maria Shriver could be among the most expensive celebrity splits on record.

Some estimates say Shriver could get more than the $100 million Tiger Wood's ex-wife Elin Nordegren received.
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Division of marital property in a San Diego divorce, or a divorce elsewhere in California, is supposed to be equal under the state's no-fault divorce law. In practice, one party to a divorce can end up with significantly more than half the assets for a number of reasons.

What constitutes community property is one potential area of contention. Property owned before marriage and inheritance to one spouse are both examples of separate property. Valuating community property is another area where a San Diego divorce lawyer will focus attention. For instance, is the marital home valued at current market value? After the economic downturn, a couple's primary residence is often a liability -- with more owed on an upside down mortgage than the property could bring at sale.

With Schwarzenegger and Shriver, there are more complications -- and more assets -- than in many marriages -- even celebrity marriages. And, with allegations about Arnold's infidelity continuing to surface, he may find an unsympathetic judge on the bench. And, with four children and the majority of the earning power, several media outlets have reported child support and alimony could easily top $100,000 a month.

Typical couples should understand the tax implications of alimony and child support as there may be opportunities to move money in one direction or the other. Alimony is treated as taxable income for the receiver and as a tax deduction for the payer. Child support is tax free for the recipient but not deductible for the payer. One caveat to keep in mind: Courts are much better about helping you collect back child support than they are about assisting with the collections of back spousal support.

In the case of Schwarzenegger and Shriver, their marriage will be seen as long-term under California law, which means she may collect alimony for an indefinite period of time. A short-term marriage is defined as one lasting under 10 years, which is in part why it's not uncommon to see celebrity couples split near the 10-year mark.

Other factors worth considering in this split is Arnold's future income from motion pictures -- particularly sequels to movies made during the marriage. The New York Post reported last year that Diandra Douglas -- the ex-wife of Michael Douglas -- moved to collect on his payday for the making of "Wall Street 2," claiming her divorce agreement entitled her to a portion of the proceeds.

For most couples, similar concerns often involve retirement accounts or the earning power of an advanced degree -- such as a medical degree or law degree -- earned during the marriage.

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