Articles Posted in Divorce Finances

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Former NFL player and Super Bowl champ, Jeremy Shockey, and Daniela Cortazar enjoyed a brief eight months of nuptial bliss before Shockey filed for divorce in January 2013. TMZ now reports that Shockey “is playing dumb with his finances according to his soon-to-be ex-wife.” Cortazar claims that Shockey’s net worth is over $15 million but apparently Shockey is pretending to know nothing about his finances in his legal documents. Shockey is even refusing to provide information regarding his net worth. Cortazar is asking a judge to punish Shockey with fines or jail time. More importantly though, to get a fair share in the divorce settlement, Cortazar should take prudent measures to make sure that Shockey doesn’t have any hidden assets tucked away.

Hidden assets are those assets which are not readily visible typically because signs of ownership have been concealed or disguised by the other spouse. Hidden assets typically include liquid assets such as bank accounts, mutual funds, stock and bonds. These types of liquid assets can easily be transferred into another person or entity’s name. Sometimes, these assets are even transferred into accounts in banks offshore which prohibit being touched under the laws of the particular country.

Learn more about divorce and property divisionHidden assets are particularly important in divorce cases because when a court does not know about a particular asset, it cannot properly divide the asset or award it to one party or the other. Hiding assets is clearly illegal because both spouses lawfully have a claim to all marital property during a divorce proceeding. Therefore, being attentive to marital finances can help ensure that your divorce settlement is fair to you.

The first step in hunting down hidden assets during a divorce proceeding requires a diligent tracking and study of all financial records. Looking at old financial statements may help to identify suspicious transactions. For instance, an asset may initially be present in financial documents and then suddenly it has disappeared near the time of divorce or during divorce proceedings.

Other tips on finding hidden assets include the following:

  • Get a credit report on your spouse. Credit reports may contain information regarding financial accounts or credit that are unknown to you.
  • Look for payment of excess income tax and then a subsequent filing for the tax refund after the divorce.
  • Have items such as artwork, hobby equipment, antiques, original paintings, etc. appraised.
  • Be diligent about locating any cash kept as traveler’s checks. You can do this by tracing bank account deposits and withdrawals.
  • Look for any inconsistencies which may indicate delayed disbursements of bonuses or stock options.
  • Be aware of any income that isn’t reflected on either financial statements or tax returns.

Read more about property division and divorce in San Diego


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In San Diego Family Courts, Judges take the issue of breach of spousal fiduciary duty very seriously. Harsh punishments are available in family court for nondisclosure of assets, failure to provide truthful information regarding income and assets and other misconduct. In April 2013, the California Court of Appeal ruled in In re Marriage of Simmons, a case of first impression. In this case, Mr. Simmons failed to disclose a separate property savings account with a value of $245,850.24. As a result of Mr. Simmons’s breach of fiduciary duty, the trial court awarded Ms. Simmons the account in full. However, the appellate court reversed that award.


California Family Code § 721 imposes “a duty of the highest good faith and fair dealing” on spouses when dealing in transactions with each other. Family Code § 1100 clarifies that duty by stating that it “includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest…” During a divorce case, both spouses are obligated to disclose all assets regardless of whether those assets are community property or separate property. The court may impose various sanctions for failure to disclose an asset. If a spouse discovers an undisclosed asset he or she may request 100% of the asset or an amount equal to 100% of the asset as a remedy.

Although the Family Code is clear regarding the availability of the “value of the asset remedy” if the asset is community property, Mr. Simmons disputed the availability of that remedy with regard to separate property assets. The appellate court agreed with Mr. Simmons and, for the first time, ruled that the “value of the asset remedy” is not available if a spouse has only failed to disclose separate property assets. However, despite the appellate court’s inclination to rule in favor of Mr. Simmons, it was still aggravated by his pattern of misconduct. Therefore, the appellate court remanded the case back to the trial court level directing the trial court to consider any additional sanctions it would like to impose against Mr. Simmons. Various other family codes, such as Family Code § 271, are available to the trial court as authority upon which to base an additional sanctions awards.

Under Family Code § 271, the court may impose monetary sanctions against a party for obstreperous conduct which impedes the policy of settlement in a divorce case. The court is not limited to an amount of sanctions and may impose them in an amount sufficient to deter future misconduct. Under this provision, the Simmons trial court may decide to order $245,850.24 in sanctions against Mr. Simmons for failure to disclose his separate property asset.

Breach of fiduciary duty is a complex divorce issue that requires representation by a competent attorney. Don’t settle for less when determining your rights.

www.BickfordLaw.com


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Considerations for Your Second Marriage and New Blended Family

The United States, especially California, has a bad reputation for its “high” divorce rate. However, along with the high rate of divorce is also a high rate of remarriage. Considering the amount of marriages and remarriages, it is not surprising to family law attorneys that 65% of remarriages involve blended families. “Blended family” is the term used by divorce attorneys to describe families including children from a previous marriage of one or both spouses. Blended families will face some unique challenges. With proper planning and awareness, individuals who intend to remarry after divorce in Del Mar can give their marriage a better chance.

Finance

One of the issues that can arise when two families come together after experiencing divorce is finance. Each family may be accustomed to a particular lifestyle that will have to change when the two families combine. Financial planners and family law attorneys recommend that blended families keep three separate bank accounts if both spouses earn income.

If this approach is followed, each spouse maintains his or her own bank account in which his or her income is deposited and both spouses share one joint account. Each month both spouses deposit a percentage of their income or a fixed amount into the joint account from which all household bills and expenses are paid. Using this method, the blended family can avoid conflict and resentment regarding how much money the spouses spend on their own children. Additionally, maintaining separate accounts can protect both spouses from the other’s debts including child support and spousal support obligations from a prior marriage.

Read more about divorce and finances from the lawyers at the firm

Real Property

Many times after a divorce, one spouse will continue to live in the marital residence. If both spouses in a blended family own a home from a prior marriage, they will be faced with the emotional and complicated decision of where to live together. All children will likely not want to leave their home after a divorce but neither spouse may feel comfortable living in the home of his or her new spouse’s ex. One possible solution is to sell both homes and to purchase a new home together that fits the needs of the blended family. However, both parties should be aware of possible tax consequences of selling their home.

Premarital Agreements

After experiencing a painful and expensive divorce, couples can be a little hesitant to jump into a new marriage to try again. After a divorce, many Del Mar couples opt to sign a premarital agreement (commonly referred to as a “prenup”) or a postnuptial agreement (if they are already married) to provide a bit of comfort when entering a new marriage. Formal agreements allow the parties to clarify ownership of assets and protect savings that may have been set aside for the children’s future. If new issues arise after the parties have entered into prenup or postnuptial agreement, the parties can consult with an attorney to amend their current agreement or draft a new one.

www.BickfordLaw.com


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

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

Learn family law terms commonly used in California

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

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

Read more from Andrew J. Botros, APC on divorce and financesLuckily for Quezada, he likely still has plenty of money left over after accounting for his taxes and tax liens. It is reasonable to think that the $29,000 in child support payment that he owed is now likely just a small chuck of change to him, and he probably won’t even notice a $29,000 deduction from his lottery winning.

www.BickfordLaw.com



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

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

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

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

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

Generally, spousal support is considered to be tax-deductible to the spouse who is paying the support. On the other hand, spousal support must be reported as taxable income to the spouse who is receiving the support. For individuals who stay at home to care for young children and have no other source of income other than the receipt of spousal support after divorce, the tax hit due April 15th might pose quite a significant financial concern.Although not commonly known, spousal support payments can in fact be designated as non-taxable and non-deductible so long as both parties agree and such an agreement is pursuant to a divorce or separation instrument. During divorce settlement negotiations, agreeing to designate spousal support as non-deductible and non-taxable may be suggested by divorce attorneys in situations where the paying spouse does not want/need the tax deduction, and the recipient spouse does not want to report the income. For instance, as described above, the receiving spouse may not want to report the income so as to avoid the tax hit at the end of the year. Lolli-Ghetti v. Lolli-Ghetti, on the other hand, is an example of a divorce case where the payee spouse did not need the tax deduction because he was a resident of Monaco and the bulk of his income was therefore not subject to federal, state and local income taxes.

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

  1. A decree of divorce or separate maintenance or a written instrument incident to such a decree;
  2. A written separation agreement; or
  3. A decree requiring a spouse to make payments for the support or maintenance of the other spouse (as defined in 26 U.S.C. §71 (b)(2)).

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

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Divorce can have a devastating effect on both parties’ standard of living and finances.
We have previously blogged about the sacrifices divorcing spouses make when they cannot afford to support two separate households at the same standard of living they enjoyed during marriage.
However, in Del Mar, the “gray divorce trend” is resulting in another sacrifice divorcing couples make – retirement.

Read more about division of retirement in divorce

From 1990 to 2010, the number of divorces involving spouses over 50 years old “gray divorcés” doubled. Experts say that one of the causes for the increase in later-in-life divorces is longer life spans. Just like a divorce between spouses in their 20’s and 30’s will affect the current standard of living for both parties, a divorce past 50 will affect retirement lifestyles. If a couple divorces when the spouses are between 20 and 40 years old, there is plenty of time before retirement for both spouses to re-build any divided retirement funds. However, gray divorcés will experience the following financial roadblocks:

First, the accumulated retirement savings between the parties is usually divided in half upon divorce. When parties divorce, all property acquired during marriage is divided equally. Most, if not all, of a couple’s retirement fund is usually acquired during marriage. Thus, each spouse will only end up with one-half of what they planned on retiring on with his or her spouse.

Second, funding two separate retirements can cost between 30% and 50% more than funding one. Post divorce, the parties will take separate vacations, take twice as many trips to visit their children and grandchildren, use two separate cars instead of one, live in two separate houses, etc. In addition, if one former spouse becomes ill, the other will not be there to care for him or her. Therefore, post divorce, a spouse may have to use significant retirement funds to pay for medical care.

Read some frequently asked questions about divorce in Del Mar

Financial planners have a few suggestions to help gray divorcés get through divorce and retirement past 50. They suggest hiring a financial adviser simultaneously with hiring a divorce lawyer. Additionally, they advise against supporting adult children when it is not feasible. Often around the age of 50, a gray divorcé will have a child who is getting married and expecting them to shell out $30,000 for a wedding. These types of purchases are not advisable. Finally, financial advisers suggest reducing spending by living in a smaller home, traveling less and eating out less.
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Brendan 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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For many Del Mar families, real estate is their most valuable asset. Because the prices of the average family home are so high, many families must invest significant funds into real estate just to live in the area.

However, upon divorce, all community property must be divided equally by the court.

If the parties have no other assets as valuable as the family home, it must be sold and the proceeds divided.

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If you have as much money as Tiger Woods, maybe it can buy you love. After a massive cheating scandal broke in late 2009, Elin Nordegren filed for divorce from her successful golf star husband, Tiger Woods. In a record-breaking settlement, Nordegren walked away from her marriage with $750 million. In return for her cash pay-out, Nordegren agreed to never publicly speak out about Woods’ affairs with over twenty different women. Despite their incredibly public divorce, just over two years after the couple reached a global settlement, Woods’ again proposed marriage to Nordegren.Apparently Woods is not satisfied with his not-so-new found single lifestyle. His friends say he is incredibly unhappy without his family and has not managed to hold a steady girlfriend since Nordegren. Although Woods has dated several other models since his divorce, he hasn’t recovered from his split with Nordegren. On or around Christmas 2012, Woods got down on one knee, presented her with a ring, and “re-proposed” to his former wife. Nordegren is considering Woods’ proposal, but only on the condition that he agree to include a $350 million anti-cheating clause in their prenuptial agreement. Reportedly, Woods has no problem agreeing to Nordegren’s condition despite the fact that his accountants think he is crazy. Woods is ready to sign on the dotted line, set a wedding date, and return back to his former married life.

Read more about San Diego divorce attorneys

California is a “no fault” state. This means that in a San Diego divorce proceeding infidelity is irrelevant when dividing assets and debts, setting spousal and/or child support, and determining custody and visitation rights of the parties. Despite this default rule, parties have the ability to agree to abide by different rules. As in the Woods-Nordegren reconciliation, parties can agree to put an “anti-cheating” provision in a premarital agreement. Under such a provision, a spouse would be punished if he or she was unfaithful during marriage. If no such provision existed, neither party could be punished by the courts for infidelity. There are strict rules that a divorce attorney must follow when drafting any agreement, especially a premarital agreement, in order to have it enforceable by the courts. It is important to contact an experienced family law attorney to draft any contracts between spouses.

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