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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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Will California Modify my Custody and Visitation Orders From Another State?

May 16, 2014

moving-boxes.jpgRelocation throughout the United States is generally a simple process; therefore, it is not uncommon for one or both parties to move to a different state after a divorce. In such cases, parents are faced with a jurisdictional dilemma with regard to their custody and visitation issues. Frequently as children get older their needs and schedules change significantly. In some cases the parents are able to adapt to new situations and reach agreements to modify outdated custody and visitation orders. However, in more high conflict cases, court intervention is necessary - especially if the parents no longer reside in the same state.

The Uniform Child Custody Jurisdiction and Enforcement Act ("UCCJEA") is the governing law for determining whether a court can exercise jurisdiction over a custody and visitation matter. Under the UCCJEA, a California court may not modify another state's custody order unless (1) the California court has jurisdiction to make an initial custody determination AND either (2) the court of the other state determines that it no longer has exclusive, continuing jurisdiction OR (3) a California court or a court of the other state determines that the child, the child's parents and any person acting as a parent do not presently reside in the other state.

moving-backyard.jpgCalifornia has jurisdiction to make an initial custody determination if California is the home state of the child on the date of the commencement of the proceeding. The "home state" is defined as the state in which a child lived with a parent for at least six consecutive months immediately before the commencement of a child custody proceeding. Therefore, unless California is currently the home state of the child, it will not proceed with the rest of the analysis to consider whether it can modify another state's order.

Once California has determined it is the home state of a child, the parties must meet item two or item three discussed above. If the court that made the initial child custody determination determines that it no longer has exclusive, continuing jurisdiction because the child and one parent fail to have a significant connection with the state and substantial evidence concerning the child's care, protection, training and personal relationships is no longer available in that state, California may modify another state's order. In addition, if none of the parties continue to reside in the state which made the initial custody order, California may modify an out-of-state custody order as long as all of the proper procedures have been followed.

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New York Dad Loses Custody Battle Over Fast Food Dispute

March 13, 2014

dad-mcdonalds-custody-battle-1.jpgIn the midst of a New York divorce case, father David Schorr gave his son a common ultimatum when his son demanded McDonald's for dinner - "you can have dinner from anywhere besides McDonald's or have no dinner at all". In response, the stubborn five-year-old decided to have no dinner at all and threw a tantrum. Schorr immediately regretted the harsh position he had taken with his son but felt it was inappropriate to back down in response to his child's outburst. While trying to convince his son to change his mind, Schorr took his son back to his mother's house early and waited for her to return home.

In the Schorr divorce, the court appointed a neutral psychologist to evaluate the parenting abilities of both parents in the context of the best interest of the child. The psychologist recommended that, considering the "McDonald's incident," the Court should eliminate or limit Schorr's weekend visits with his son. During the pendency of the divorce, Schorr has alternating weekend visits with his son and dinner with him each Tuesday. In response to the psychologist's statements, Schorr has filed a lawsuit against her for defamation. As the suit was filed in early November, there is little information available regarding its progress.

During the pendency of a divorce action where child custody and visitation is a disputed issue, each party's parenting is under strict scrutiny. In the Schorr case, one father's attempt to teach his son discipline cost him time with his child. It is hard to imagine that legal parenting tactics such as spanking (within reason) and other various forms of discipline can result in a parent losing custody of his or her child. Outside of the parameters of a divorce case, if a problem is reported to authorities, such parenting decisions would be evaluated by Child Protective Services ("CPS") rather than a court-appointed psychologist. It is not likely CPS would have removed a child from his father's care based on the McDonald's event described above. This is a cautionary tale for all parents involved in a custody dispute, even one "mistake" could cost you valuable time with your children.

In a California custody case, the court, the parties, or the attorneys have the ability to request a neutral evaluation be conducted by a mental health professional (like in the Schorr case). If both sides agree a neutral is needed, they can stipulate (agree) to appoint an evaluator without Court intervention. Generally, once the evaluation is complete, the evaluator will prepare a report outlining his or her findings. The expert's report may be read by both parties and the judge in the case.

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Should I Agree to Non-Modifiable Spousal Support?

December 18, 2013

non-modifiable spousal supportThe issue of spousal support is often a hot topic in divorce proceedings. In today's economy, one specific aspect of spousal support that becomes a very important consideration the couples going through a divorce is whether the spousal support order will be modifiable or non-modifiable. Typically, an agreement for spousal support awarded to either party is subject to subsequent modification or termination by court order. However, Family Code Section 3591(c) provides that the parties may agree in writing (or oral agreement entered into in open court) to non-modifiable spousal support.

Modifiable spousal support means that a party could later file a post-judgment action with the court to request an increase, decrease or termination of spousal support upon demonstration of a change in circumstances that would justify a change to the original spousal support award. There are several reasons that a spousal support order might need to be changed. Perhaps the spouse who is receiving support no longer needs as much spousal support because he/she has had an increase in income or is cohabitating with a person of the opposite sex. Or if the supported spouse remarries, then spousal support needs to be terminated all together. On another note, sometimes the payee spouse, for reasons out of his/her control, has a significant decrease in income and can no longer afford the amount of spousal support that was ordered. The court would likely consider these factors in making a modification to the support order.

Non-modifiable spousal support, on the other hand, means the spousal support award will not be subject to modification or termination. Many divorcing couples may wonder if this is a good idea. The most common reasons why parties would want to agree to non-modifiable spousal support is that it gives both parties a sense of certainty because they know exactly how much they will be paying or receiving each month. This helps parties budget accordingly for future payments and expenses without having to worry that the amount may change at any time. Another reason a party would be inclined to agree to non-modifiable spousal support is if that party is expecting an increase in his/her income or a major upcoming payout, then he/she would not have to share that increase in income with his/her spouse.

While it may seem like there are some pretty good reasons to agree to non-modifiable spousal support, it is important to remember that if the parties waive their right to modify, it does not matter if there is a change in circumstances - a court absolutely will not modify the spousal support award. So, if the party receiving support wins the lottery jackpot, the payor spouse would still be stuck paying spousal support to him/her. Or, on the other hand, if the payor spouse becomes completely disabled and can no longer afford to pay spousal support, he/she will still on the hook for a spousal support payment, despite his/her inability to work.

Despite the uncertainty with modifiable spousal support, parties seem to have greater motivation these days to choose modifiable spousal support due to the high rate of unemployment. To ensure that you make the right decision regarding modifiable or non-modifiable spousal support it may behoove you to seek the assistance of an experienced divorce attorney.

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Enforceability of Unfair Terms in Marital Settlement Agreements

June 12, 2013

San Diego Divorce CourtIn January 2013, divorce attorneys were abuzz as our local Court of Appeal took a strong stance with regard to enforceability of Marital Settlement Agreements ("MSA's"). In San Diego family law cases, the parties to a divorce have the ability to enter into agreements regarding any area of their case. Settling issues such as child custody/visitation, support, and property division is advantageous to the parties because they have the opportunity to craft unique provisions which meet their individual needs. San Diego family courts are limited by the California Family Code and local/state guidelines in what types of orders they can make. However, when parties and/or their divorce attorneys draft their own settlement terms it is imperative to consider all possible future scenarios before signing a Marital Settlement Agreement.

In the unfortunate case of Marriage of Hibbard, the parties to the divorce agreed that spousal support "shall not be reduced to an amount lower than two thousand dollars per month" and would only terminate upon Wife's death or remarriage or the death of Husband. In this case, the parties were married for thirty years from 1971 to 2001. At the time of separation, Husband and Wife were both lawyers. Husband earned $84,000 per year and Wife earned $24,000 per year. In 2011, Husband's post traumatic stress disorder ("PTSD") fully manifested and hindered his ability to work. Husband's PSTD symptoms began in 1970 after he served in combat in Vietnam.

In 2012, unable to work more than a few hours a day and drowning in debt, Husband filed a motion in family court to modify spousal support. After shutting down his law practice, Husband only expected to receive $4,040 per month in income from disability and Social Security. Wife opposed Husband's request to modify support stating she was only receiving $1,738 per month in teacher's retirement and Social Security. Wife also stated she was similarly unable to work. The trial court held that it was unable to modify spousal support outside of the terms of the marital settlement agreement and therefore refused to reduce support lower than $2,000 per month. The Court of Appeal upheld the trial court's decision.

Marriage of Hibbard is a great example of the importance of carefully considering and drafting Marital Settlement Agreement provisions. Before singing their Marital Settlement Agreement, the Hibbards could have easily imagined a situation where Husband would be financially unable to pay Wife $2,000 per month in spousal support. However, they did not provide any exceptions to the blanket prohibition on a spousal support award lower than $2,000 per month. The Court upheld their agreement despite its unfair applicability to the parties' current circumstances. Marital Settlement Agreements are interpreted under general contract laws which hold that contracting parties have the right to enter into any agreement of their choosing. Divorce attorneys will advise their clients that the role of the court is not to re-write agreements but rather to enforce them as written.

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Celebrity Divorce - Brendan Fraser Fights to Lower his Support Obligations

March 11, 2013

Celebrity_Divorce.jpgBrendan Fraser and Afton Smith married in 1998 and divorced nine years later in 2007. At the time of their divorce, Fraser was ordered to pay Smith approximately $900,000 per year for spousal support and child support for their three children. Now, Fraser claims that he can no longer make the required payments, which, if made on a monthly basis, total $75,000 per month. Fraser has filed a motion in family court seeking a post-judgment modification of child and spousal support.

In San Diego, after a divorce is finalized, family courts generally have the ability to change support orders if facts and circumstances have materially changed since the first orders were made. If the moving party can prove to the court a "material change of circumstances" he or she may be granted a post-judgment modification of support. One of the most common changes of circumstance relied upon by courts is a change in income for one or both parties. If the spouse ordered to pay support has experienced a significant decrease in earnings, the court may lower his or her support obligation.

However, it is important to note that San Diego family courts only have the ability to modify the support order back to the date a motion was filed. If one spouse gets fired and does not file a motion to modify support for a few months, he or she may owe a significant amount of back child and/or spousal support. Regardless of a spouse's current income, his or her obligation to pay support will not change until a motion is filed with the court. Even in cases where a judge determines that a material change of circumstances exists and that support should be modified going forward, he or she is not required by law to make the order retroactive to the date the motion was filed.

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Fraser alleges that he has had an increasingly difficult time finding acting jobs since the third film in the "Mummy" franchise wrapped in 2008. However, according to IMDB, Fraser has worked on 17 projects since then. Smith claims that Fraser is lying to the court about his true income and hiding his assets. Smith has good reason to be suspicious of his earnings claims. At the time of their divorce, Fraser claimed that he would make $0 from future acting work. In fact he went on to star in movies grossing up to $2 billion worldwide. When confronted with this information, Fraser claimed deals like this were not "set in stone" at the time of his divorce. It is crucial for a spouse to present an accurate depiction of his or her income to the court in a family law case. If Fraser is in fact misleading the court and his ex-wife, he may face harsh penalties and sanctions.

Please contact us if you are contemplating legal separation, thinking of learning about divorce, or have questions regarding division of assets in divorce. Nancy J. Bickford is the only attorney in San Diego County representing clients in divorce, who is a Certified Family Law Specialist (CFLS) and who is actively licensed as a Certified Public Accountant (CPA). Don't settle for less when determining your rights.