• Pension is not alimony.

    In a split decision, the Ninth Circuit Court of Appeals reversed the Tax Court to hold that a taxpayer could not deduct as alimony the half-interest in his vested pension benefits he paid his ex-wife under a California divorce decree. The decision may carry implications for how divorcing couples divide pension benefits in California and other community property states and when the employee-spouse elects to retire.

    John Dunkin, a This article or section is written like an .  officer, and his wife, Julie, divorced in 1997. The divorce court awarded Julie half of John’s pension, based on California’s community property laws. Although he was eligible to retire and receive benefits, John decided to continue working. Consequently, the court ordered John to pay Julie the present value of her share of the pension, which the court determined to be $25,511 a year. He paid her the sum in 2000 from his wages and deducted it from his federal taxable income as alimony. The Service argued that he was subject to income taxes on that amount. The Tax Court ruled for Dunkin, and the government appealed.

    The Ninth Circuit noted that under In the meantime Adv. 1. in the meantime – during the intervening time; “meanwhile I will not think about the problem”; “meantime he was attentive to his other interests”; “in the meantime the police were notified”

    meantime, meanwhile , in negotiating divorce settlements, it is important to consider state property rights, pension vesting and expected retirement dates to avoid unexpected tax outcomes.

    * Commissioner v. John Michael Dunkin, 100 CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , Ph.D., Hugh Culverhouse Professor of Accounting and director, University of Alabama The University of Alabama (also known as Alabama, UA or colloquially as ‘Bama) is a public coeducational university located in Tuscaloosa, Alabama, USA. Founded in 1831, UA is the flagship campus of the University of Alabama System. , Tuscaloosa.

    http://www.thefreelibrary.com/Pension is not alimony.-a0173923005

  • Important Values in a Relationship

    There are certain values, which when inculcated, will surely lead a person into a successful relationship. So what are these values? This article is dedicated to answering this very question.

    Important Values in Marriage

    Marriage is considered as the most sacred institution of our lives. It is a pillar on which today’s society resides, and this has been the case since the dawn of human history. Sadly, there is no such thing as a perfect marriage. It does have a few (if not many) flaws. But those marriages that do work are based on certain values.

    Honesty Much has been said and written about honesty, and it is one of the most important values in a relationship. It is a base on which all other values stand. But does honesty mean that you should simply acknowledge your mistake to your partner? The answer is no. Not only should you accept your mistake in front of your partner, but you should accept a mistake to yourself, and admit that you are not perfect. But the road does not end there. There should be a real effort to improve yourself and not commit the same mistake again, ever.

    EqualityEvery wife feels that her husband does not treat her equally. Most often than not, this is actually what is happening. Most marriages end up in divorce because one of the partners does not think of his or her spouse as an equal. Husbands often think that children are the responsibility of the wives, and wives often think that it is a husband’s job to be the bread-winner of the family. Unless and until you don’t start thinking of your significant other as an equal to you in all aspects, you will have problems in your marriage. Sharing every responsibility equally is the foremost commandment of every marriage.

    CommitmentThis is the most important value in any marriage. When you are committed, only to your spouse, then only can you call yourselves truly married. And if you are not committed to your partner, then what’s the point of your marriage? You are being dishonest, not only to your partner, but also to yourself.

    Important Values in Life

    RespectIf you don’t respect a person, then you wouldn’t notice his good qualities. Respect is one of the most important values in a healthy relationship, in that regard. It is such a value in life, which only increases when you give it to others. You simply cannot expect anyone to respect you or your point of view, if you would not do the same to them.

    UnderstandingUnderstanding is the second most important value in life. To give you a common example, many times, a person knowingly commits a mistake. This could be because he does not have any other choice and has a good reason for committing that mistake. Yet, he comes and confesses that mistake. You should try to understand his mistake and the reason for which he committed that mistake. Holding a grudge permanently is only going to cause you anguish, and also to the person in front of you as well. Understanding and letting go is the mantra for having a peaceful mind.

    Discipline Everyone has many duties in life, which they have to shoulder. You have duties towards your parents, as they have brought you up. You have duties towards your siblings, as you grew up with them. You have duties towards your employers, as they are responsible for your livelihood. The only way to shoulder these responsibilities is to be disciplined in your effort. It is a common notion that being disciplined, is to do your work in a routine fashion. But it is not so. Discipline is following the ideal rules of conduct and duties that I mentioned can only be fulfilled through ones self moral code of conduct.

    The values in the above illustration are not only important values in a relationship, but they are important values in society as well. To be successful in any relationship, the mentioned values need to be adhered to and practiced.

    http://www.buzzle.com/articles/important-values-in-a-relationship.html

  • Divorce Asset Protection – How to Protect Your Assets During Divorce

    How to protect your assets during a divorce? Protecting assets through a divorce can be a complex financial process further complicated by the emotional devastation. If you are going through a divorce it may be important to you to determine ahead of time what your assets are and how you will protect them from your spouse.

    The first step will be to hire a lawyer familiar with the laws for dividing property in your state. Good legal council will prove invaluable in defending your claims to property and can give you names of appraisers and accountants to help your case. Your divorce lawyer will also assist you on how to remove any Powers of Attorney granted to your spouse for control of your property and finances.

    There are several steps you should consider when trying to protect your assets during Divorce:

    1. Identify everything that was given to you as a gift or family heirloom.

    2. Identify community property.

    3. Hire a professional appraiser.

    4. Figure out how you will split retirement and physical assets.

    IDENTIFY GIFTS AND FAMILY HEIRLOOM TO PROTECT ASSETS DURING DIVORCE

    A camera will prove to be your best friend during a divorce. You should make a list of all items which were given to you before and after the wedding and take pictures of these items prior to removing them from the residence. Once you have compiled your list you should remove all your personal items to a location not easily accessible to your spouse.

    Your spouse will be within their rights to claim any items you leave behind in the residence and do not immediately claim. If you or your spouse left the residence voluntarily, either of you is entitled to return at any time and retrieve belongings. If locks have been changed, except in the case of a court order, you are within your rights to have a locksmith open the doors. Your next step will be obtaining, if possible, written proof of who gave you the items and when they were received.

    COMMUNITY PROPERTY ASSETS

    Community property of assets refers to the belongings shared by you and your spouse, such as the furniture, pots and pans, etc. It is important to take pictures of these belongings as well before you remove the items you wish to claim as your own. Photographs are especially valuable if there are expensive items you would like to have but did not have the ability to move and you feel your spouse may try to take them. All photographs should be kept in a secure location not readily accessible by your spouse.

    HIRE A PROFESSIONAL, INDEPENDENT APPRAISER FOR DIVORCE ASSET PROTECTION

    Division of property during a divorce is determined by the fair market value of the disputed items to ensure one party is not being favored over the other during settlement. An appraiser will be necessary to determine accurate estimates, although you should consult your lawyer on finding a qualified individual.

    Using the same accountant who handled your assets in the past may seem suspicious and a court may order another appraisal or rule in favor of your spouse’s accountant. It is critical that an appraisal be straightforward and unbiased for the protection of assets during Divorce.

    ESTATE PLANNER CONSULTATION TO DIVIDE AND PROTECT ASSETS DURING DIVORCE

    When considering how to divide assets prior to divorce settlement, it is wise to consult a professional estate planner or financial analyst. For example, if you are thinking about selling your home it may be wise to do so prior to settlement since you are entitled to deduct up to $500,000 of the sale from capital gain taxes.

    Selling the home after the divorce is final and reduces your benefit to only half of the sale price. Retirement assets and stocks should also be discussed. If you and your spouse choose to split the retirement benefits you must sign a Qualified Domestic-Relations Order (QDRO) which notifies the pension sponsors how to pay the benefits. Although you cannot take stocks in your spouse’s name you may be entitled to the proceeds once they are sold.

    EXCEPTIONS TO THE RULE ON DIVORCE ASSET PROTECTION

    Some states, such as New York, are known as “equitable distribution” states. “Equitable” mean “fair” and assets will not be divided right down the middle based on their fair market value. Division of assets according to New York Divorce law states that all property obtained prior to the marriage still belongs to the individual and all property obtained afterwards will be distributed by the court based on established guidelines.

    The factors a court considers in equitable distribution states for divorce assets are:

    1. The difference in income and property from when the marriage began to the date divorce was filed.

    2. The age of both individuals and how long they were married.

    3. The needs of a parent who has won full custody of children involved (i.e. will they need the house to properly care for the child?).

    4. Any loss of pension or inheritance.

    5. What contributions the parties made to acquire the property.

    6. Future earning potential of both parties.

    7. Tax consequences.

    If you are considering divorce it is wise to consult a lawyer as soon as possible to ensure the protection of your assets and help you understand your rights as they pertain to individual state law. For maximum protection Estate Street Partners is available for consultation during and before a divorce.

    Author bio – Rocco Beatrice, CPA, MST, MBA

    Award-winning estate planning & trust expert

    MS – Taxation, Master of Science Taxation

    MBA – Management / Taxation

    BSBA – Management / Accounting

    CPA – Certified Public Accountant

    —–

    Asset Protection Irrevocable Trust, Estate Planning

    Hide Your Assets Now

    71 Commercial Street #150, Boston, MA 02109

    tel: +1.508.429.0011 fax: +1.508.429.3034

  • Resolving the Question of Whether or Not to Have Children

    For some couples, the decision to have children is something that was discussed long before marriage—in some cases; I am told, on the first or second date ! But for many couples, deciding whether or not to have children can be one of their most daunting issues. With couples getting married later and women much more likely to have career dilemmas, the choice of whether or not to have children is often more urgent, since there’s so often a smaller window of time when women can safely conceive. Because this is one of life’s few decisions that is irreversible, it’s one that cannot be taken lightly or be made with haste.

    The argument for parenthood is in many ways obvious: Parenthood can be infinitely and intrinsically rewarding on countless levels. There is no bond quite like that between a parent and child. And the experience of parenthood allows you to give in ways that are unique to this special relationship. Having children can also create a special bond between you and your partner as co-parents and ultimately lead to the incomparable joy of having grandchildren later on. It also allows you to see the world again through your child’s eyes, which can be extremely fulfilling—even when your children become adults.

    Raising a child is also an enormous task; and its intensity cannot truly be imagined until it’s experienced. Every aspect of your life will change when you have a child and parenting will account for much of your time. There are years when it may even define you!

    However, exploring and discussing the question of whether or not to have children can bring your deepest values, joys and fears to the surface. Here are some of the most common things to consider if you’re on the fence:

    It’s not about you and your friends-The decision of whether or not to have a child needs to be made solely by you and your partner! Yet the pressure—real or perceived— from others can cloud your own thinking about this. Don’t let the desire to maintain your friendships by ensuring you are in similar lifestyles, be a factor in making the best decision for you and your partner. Make sure you and your partner ask yourselves, “Why do we really want children?”

    It’s also not your parents’ decision-Many couples are or at least feel pressured by their parents who want grandchildren. Your parents may want grandchildren and be disappointed if they don’t have them, but they’re not entitled to grandchildren. Conceiving out of guilt is not going to serve anyone in the long run. Ask yourselves “Are we ready to make parenting our top priority and what sacrifices are we specifically ready and willing to make?”

    A child will not save an ailing marriage- A common myth that I’ve heard many times is that having children will save or improve a dysfunctional or unfulfilling marriage; but nothing can be further from the truth. Children can sometimes strain and test the endurance of even the best relationships. Ask yourselves, “Can our relationship withstand the realities of having less freedom and private time together?” And perhaps ask yourself in the privacy of your own mind, “If we were unable to have kids or chose not to have them, am I still in a relationship with the person I want to grow old with?”

    If you’re still not sure, the best advice is to work on this crucially important decision until you are less ambivalent. I also offer more guidance and some case studies on this subject in my book The Art of Staying Together. Bottom line: Having a child—when it’s what you and your partner truly want and have a loving home to provide—could be the most meaningful aspect of your life and the best contribution to the world that you can leave behind. But go into it with your eyes open.

    Michael S. Broder, PhD is a renowned psychologist, executive coach, bestselling author, continuing education seminar leader, and popular speaker. He is an acclaimed expert in cognitive behavioral therapy, specializing in high achievers and relationship issues. His work centers on bringing about major change in the shortest time possible. http://stageclimbing.com

  • Community Property and Separate Property

    In the field of family law, there are certain ideas that are very important. Central among those is the concept of property division. When you go through a divorce, there has to be some way to divide the property. Different states have different laws governing exactly how property will be divided, but the general guidelines are mostly the same across the board. For almost every jurisdiction, the single most important distinction is made between community property and separate property. This distinction is important because it decides what will be divided equally among the parties and what can be protected by savvy attorneys in a divorce proceeding.

    What constitutes community property?

    Though the specific details of what constitutes community property will differ according to jurisdiction, it can generally be described as any assets that were acquired by the parties during the course of the marriage. This can include any income earned by either party or any real asset, as well. Examples of things that qualify as community property are as follows:

    * Home purchased during the course of marriage

    * Retirement accounts

    * Joint bank accounts

    * Income accrued during the course of marriage

    * Cars

    * Jewelry and tangible assets

    * Cash holdings

    * Tangible and stock-based investments

    Community property distinctions are drawn by states on the idea that all things purchased and earned during the course of a marriage are the property of both people in that marriage. When a divorce proceeding takes place, dividing this property can be done in a number of different ways. It can be done on an item-by-item basis, and this is usually the most popular way to divide assets. Some couples choose to liquidate most of their community property if there are items that both parties want or neither party especially wants.

    Separate property.

    Not all property can be called community property, though. In some jurisdictions, there are provisions that allow for separate property that does not have to be equitably divided in a divorce proceeding. The justification for this is that certain property is the full domain of a single owner and the law does not presume joint ownership in these instances.

    Typically separate property refers to those things that were earned or purchased prior to the marriage or after a formal divorce. This means that if people bring savings into a marriage or investment holdings into a marriage, they typically will not have to divide that with a spouse during a divorce. Likewise, there are special types of things that can be gained during a marriage and remain separate property. Inheritance, for instance, is generally considered separate property and can be disposed with as the single owner sees fit. Likewise, gifts are considered separate property under the law of most states.

    It is important to understand that, while these distinctions do exist, there are agreements that can modify what things fall in what categories. Likewise, these agreements can govern the division of property. For those people going through a divorce proceeding, it is important to contact a reputable attorney who can explain the process as it relates to your specific situation.

    With extensive experience in all aspects of divorce, family law, accident, and injury law, the Rocheleau Law Group has aggressively and successfully represented numerous clients in Las Vegas. For more information on our services, please visit our website at http://www.rocheleaulaw.com or contact us at 702-914-0000.

  • Divorce and the Division of Assets and Debt in Washington

    Because Washington is a no fault state, a divorce can be filed without any “grounds.” There used to be a time when divorces could only be obtained by alleging, that your spouse was unfaithful, abusive, etc. In no fault states such as Washington, all a party needs to plead in order to be granted a divorce is that “the marriage is irretrievably broken.” In English, that means that that the marriage is broken and beyond repair. No fault divorces allow the parties to dissolve their marriages without having to dredge up or allege ugly, hurtful and largely irrelevant facts to get through the court house doors.

    Once a divorce is filed the court has jurisdiction over all the marital assets and debts. Washington is a community property state. That means that all property including your wages and debts which were acquired during the marriage are owned by the community (the husband and the wife). Even if one spouse never worked or contributed toward obtaining an asset, under our state’s laws that property is community property and is subject to a “fair and equitable distribution.” Fair and equitable does not mean 50-50. Fair and equitable means that the distribution takes into account: the length of the marriage, the health of the partners, the amount and kinds of assets to be divided, and other factors. Taking all of those factors into consideration, the court has the discretion to divide the assets in a manner it deems to be fair and equitable.

    Most parties to a divorce have both community property and separate property. Separate property is property owned prior to marriage, property that was inherited by one of the spouses or property that was gifted to one spouse. It should be noted that it is possible for property to have both separate and community characteristics. For instance, say you put a down payment on a home and purchase it prior to your marriage. That property is presumptively separate property. Fast forward ten years, you’ve now married and you and your spouse now live in the house, have made improvements to it and make the mortgage payment on the home from either one or both of your wages. Your spouse, though not on title, may have what is called an equitable interest in a portion of the equity in the home if you divorce.

    The interest which the non-titled spouse acquires under the above scenario is sometimes called an equitable lien. The easiest way to define an equitable lien is by saying what it is not. An equitable lien is a lien which is not created by statute or mandated by law. It is a lien that which is granted to satisfy a debt or obligation that is equitable in nature. In the example I’ve given the court generally reasons that because community earnings were used to pay a portion of the mortgage; the community acquires an interest in the separate property. This interest is commonly referred to as an equitable interest.

    An equitable interest, like an equitable lien is an interest that is not based upon legal title or statutory right but rather is claim that is based on what is fair and right. In Washington Courts, judges make rulings on the basis of both law and equity. Court will consider many factors in determining whether or not to recognize the existence of an equitable lien or whether the non tiled spouse should be compensated. One of the factors the court considers is whether the non-titled spouse had use of enjoyment of the property during the marriage. If the answer is yes, the court will offset the fair rental value of the non-titled spouse’s occupancy against his or her equitable interest. The offset would work as follows: community property>

    It is important to know that under Washington Law, “All property, both separate and community is before the court for fair and equitable distribution.” What does that mean? It means whether you call the property community or separate, the court has the authority over all of it and may even award your separate property to your spouse under certain circumstances.

    Debt is treated in much the same way as assets. Debt can be community or separate. The court generally draws a bright line on debt division. It is uncommon for the court to make one spouse responsible for the separate or pre-marital debt of the other. Typically, court will divide community debt equally. Community debts are those debts that were incurred during your marriage. People often think that if they did not know that their spouse incurred certain debts or if the debt was incurred in only their spouse’s name; they are not responsible for the debt. Wrong. The court will generally first determine whether the debt was incurred for the benefit of the marital community. Was the debt incurred for a new washer and dryer, orthodontia for the kids, a family vacation, Christmas or birthday gifts? Most courts would view these kinds of expenditures and the debt associated with them, as benefiting the marital community. If on the other hand you could prove that credit card advances were taken at the local casino, horse track or strip joint, the court might well decide to treat those debts as separate. One of the most important factors considered by the court when dividing debt is who has the stuff? The debt generally follows the property. So, if you hope to be awarded the 42″ plasma TV, the debt associated it will generally be awarded to you as well.

    Asset and debt division can be complicated. The court is mandated to make a “fair and equitable” distribution of both; what is fair and equitable depends on the facts of your case. The advice of a skilled family law attorney will help you navigate through all aspects of debt and asset division.

    Sources:

    Black’s Law Dictionary Fifth Edition

    WA Family Law Desk Book

    RCW 26.09.080

    I was born in Guantanamo Oriente Cuba. My family and immigrated to the US shorlty after the Cuban Revolution. I grew up on the east coast and attended college and law school in the Boston Area. I am the…  View profile

  • The Mismatched Expectations of Marital Sex

    Over time this dynamic shifts and things should begin to resemble "normal," but what is normal? One study says Americans on average have sex approximately 2.3 times per week, or 118 times a year.  Another study states that the percentage of men who think about sex everyday is 70%, with women coming in at 34%.  No information was available on how often Tiger Woods thinks about sex, but I’m guessing it’s more than average.

    What is the happy number, the one where both partners are equally satisfied and the equity of effort is fair?  Depends who you ask. I know one couple who came up with an "every other day" rule of thumb, while others opt for weekends only.  However, I have also heard of people who haven’t had sex in six months.  Wow, talk about dissatisfaction! 

    Food for thought:  What’s something your partner could do to make you feel more amorous?

     

     

    http://technorati.com/lifestyle/family/article/the-mismatched-expectations-of-marital-sex/page-2/

  • Debts in a California Divorce

    My spouse ran up huge credit card debts during the marriage. In dividing assets and debts in the settlement agreement who should be responsible for these debts?

    In California, Family Code section 910 provides that the community is liable for all debts incurred during the marriage and prior to separation. It doesn’t matter whether the debt was incurred by one spouse for there own benefit or for the family. It also doesn’t matter whose name appears on the bill or the credit card statements. If it was incurred during the marriage and prior to separation it’s a community property debt and both spouses are equally liable. This means that when the parties are negotiating a settlement and tallying the marital balance sheet such debts should be divided equally. A better option might be that one spouse agrees to pay off the joint debts in return for a greater share of the community property. The spouse paying off the debts can at least make sure that joint debts are paid because as long as debts are jointly owed both spouses are financially responsible to the creditors.

    What if a married couple pays off one parties pre-marriage debts?

    Consider this example. Bob and Jackie get married. Bob has huge credit card debts that he incurred before the marriage. Bob and Jackie want to improve their credit rating so they can buy a house. They agree to pay off Bob’s debts. However, once they are debt free, Bob files for dissolution. In this case, Bob and Jackie have used community property earnings to pay off Bob’s separate property debt. California case law states that the community is entitled to a re-imbursement for the amount it paid to discharge one parties separate property debts. 1 So in the above example, the community is entitled to a reimbursement for paying Bob’s debts.

    What if one party uses their separate property to pay off community property debts?

    In this example after they get married Bob and Jackie go on vacation and rack up huge debts. Jackie dips into her brokerage account which she built up prior to the marriage to pay off the vacation debts. In this case, Jackie has used her separate property to pay off community debts. California case law states that a spouse who, during marriage and before separation, uses separate property to satisfy a community debt is presumed to make a gift to the community. 2 So in the above example, Jackie is not entitled to a re-imbursement for paying the community vacation debts.

    There is one important exception to his rule. Family Code section 2640 provides that where one party uses their separate property for the acquisition of community property, the paying spouse has a statutory tracing right of reimbursement if they have not waived the right in writing. Contributions to the acquisition of property include downpayments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of property. They do not include payments of interest on a loan to purchase property, or payments for maintenance, insurance, or taxation of the property. So in the above example, if Jackie had used her separate property brokerage account to pay off the principal on a joint mortgage or for a downpayment she would be entitled to a reimbursement of that amount.

    After separation one spouse uses their separate property earnings or property to pay off community debts.

    In this example after Bob and Jackie separate, Jackie continues to drive the BMW which was purchased with a loan during the marriage. Bob continues making the loan payments on the car. Can Bob claim a reimbursement credit for all the payments he makes from the date of separation to the date of trial?

    California case law has developed the general rule that a spouse who, after separation, uses earnings or other separate property to pay pre-existing community obligations should be reimbursed out of community property upon dissolution. 3 These are traditionally called “Epstein credits” after the California Supreme Court case that established the rule.

    Under this general Bob could, in theory, claim credits for all the payments he makes on the car loan after separation. But what if Bob was driving the car and making the payments. Wouldn’t it be unfair for Bob to have the use of the car and also claim reimbursement credits? That’s what the Court said in Epstein. It laid out an exception to the general rule where the paying spouse also uses the asset and the “amount paid was not substantially in excess of the value of the use.” So this means that Bob could not claim credits for the monthly payments if he drives the car but probably could claim a credit if he paid of the entire loan.

    There are two other important exceptions to the Epstein general rule that a spouse who uses separate earnings or property to pay off pre-existing community obligations is entitled to a reimbursement: (a) where there is an agreement between the parties that the payments will not be reimbursed, and (b) where the payments were intended as a gift or as child or spousal support.

    After separation one spouse uses community property funds to pay of their living expenses. What are the consequences?

    In this example, Bob and Jackie separate and Bob agrees to pay $1000 per month in support and “whatever else you need out savings.” Jackie takes out $1,000 community property from the joint bank account to pay various living expenses. California case law provides that the community is entitled to re-imbursement where one spouse uses community property to pay separate obligations after separation to the extent that exceed a reasonable amount for child and spousal support. 4 A reasonable amount would probably be the amount of guideline support that a Court would order in an application for temporary child and spousal support. If that amount were $1,500, in the above example, Jackie would have to reimburse the community $500 ($2,000 – $1,500 she received). In the division of community property she would receive $250 less in community property. Since this rule flows from Epstein, the parties can waive the rule in writing and agree that such payments shall not reduce the community estate.

    After separation one spouse stays in the family home while the other spouse pays the mortgage. What are the consequences?

    It’s often the case that after separation one spouse moves out of the family home (“the out-spouse”) while the other spouse stays in the home with the children (“the in-spouse”). The out-spouse, usually the husband, may offer to maintain the status quo by continuing to pay the mortgage payments and other payments such as property taxes to maintain the property. In such a situation the in-spouse should be warned that there may be serious consequences of such an arrangement at the time of trial.

    We’ve already seen one consequence. The out-spouse paying the mortgage payments may be entitled to Epstein credits because they are paying separate property earnings towards a community property debt unless there was an agreement to waive such reimbursements or such payments were a form of child or spousal support.

    The other major consequence is that if the reasonable rental value of the family home is more than the mortgage payments, the in-spouse may be required to re-imburse the community for the difference in these payments between the date of separation and the date of trial. These are called Watt’s charges after the case that established the rule. 5. The general rule is that where one spouse has the exclusive use of community assets during the date of separation and trial, that spouse may be required to compensate the community for the reasonable value of that use. Consider this example. Bob and Jackie separate. Jackie and the kids stay in the family home after separation. Bob agrees that he’ll continue to support the family and pay the mortgage and other expenses. The mortgage payments are $1,500 per month. If Jackie had to pay the fair market rent for the property she’d pay $2,500 per month. Bob pays the mortgage for 10 months from the date of separation to the date of trial. Bob could argue that he should be re-imbursed Watt’s charges of $10,000 ($2,500 – $1,500 x 10). In a division of community property he’d be entitled to an extra $5,000. Bob could argue that he should also be entitled to Epstein credits of a further $15, 000 ($1,500 x 10) which would increase his share of community property by $7,500.

    This would mean that Jackie’s entitlement to community property would be reduced by $25,000 when she thought that Bob was supporting her and maintaining the status quo? Isn’t this grossly unfair? 7. You’d think so but that didn’t stop the Court of Appeal awarding Epstein credits and Watts charges in similar circumstances in In re Marriage of Jeffries (1991) 228 Cal. App. 3d 548. But wait a minute. Isn’t there an exception to the rule where payments are made “in lieu of spousal support?” The answer is yes “but” this has to be clearly spelled out before the Court will treat such payments as support. In Jeffries, there was even an Order of the Court that said the payments were “in lieu of spousal support.” However, the Order also said that the Court retained jurisdiction to characterize these payments and determine whether the Husband should be entitled to reimbursements.

    In another case the Court of Appeal reached exactly the opposite conclusion to Jeffries. 6. In this case the husband also paid the mortgage pursuant to a temporary court Order “in lieu of spousal support” and at trial claimed Epstein credits and Watts charges. The Court of Appeal held that public policy and the language of the Court order required that the Court deny the husband’s claims for Epstein credits. The Court then decided that since the wife was, in effect, paying the mortgage she would not have to pay any Watt’s charges because the monthly mortgage payments were the same as the fair market rental value of the home.

    The only solution to this mess is for the parties and their attorneys to agree early on in the proceedings whether a spouses payment of community debts (such as the mortgage) and one spouse living in the family residence should be treated as spousal support which does not generate Epstein credits or Watt’s charges. If it’s treated as spousal support any agreement or Order should contain explicit language that mortgage and other payments by the out-spouse and exclusive residence by the in-spouse in the family home “shall be treated” as spousal and child support and the paying spouse shall not receive any reimbursements such as Watt’s, Epstein, Jeffries credits and charges.

    Who is responsible for credit card debts?

    Family Code 2623 (a) provides that debts incurred after separation but before the judgment of dissolution are confirmed to the spouse who incurred the debts if they are for “non-necessaries of life” of the spouse or the minor children. If they are incurred for the “necessaries of life” of the spouse or the minor children, then they will confirmed to either spouse according to each parties needs and abilities to pay when the debts was incurred, unless there’s a written agreement or order for support.

    Generally, debts incurred during the marriage shall be divided between the parties. However, Family Code 2625 gives the court the power to assign a debt incurred during the marriage to one spouse if it “was not incurred for the benefit of he community.” 8 Further, Family Code 2602 provides that the court may also award an offset against a party’s community share if it finds that amounts were deliberately misappropriated by a wrongdoing spouse.

    Footnotes:

    1. Marriage of Walter (1976) 57 Cal. App. 3d 997.

    2. See v. See (1966) 64 Cal. App. 2d 778. In Re Marriage of Nicholson (2002) 104 Cal. App. 4 289, the Court of Appeal held where Husband had used $30,000 that his mother had given him as a gift (i.e. separate property ) to pay off the credit card ( community property debts) so they could qualify for a loan to buy a house, he was not entitled to a re-imbursement.

    3. In re Marriage of Epstein (1979) 24 Cal. 3d 76. Also In Re Marriage of Tucker (1983) 141 Cal. App. 3d 128.

    4. Epstein, above; In re Marriage Stalworth (1987) 192 Cal. App. 3d 742.

    5. In re Marriage of Watts (1985) 171 Cal. App. 3d 366.

    6. In Re Marriage of Garcia (1990) 224 Cal. App. 3d 885.

    7. This is the conclusion of one Family Law Commissioner: “It is fundamentally unfair for one spouse to move out and to allow a post-separation living arrangement to stabilize on one set of financial assumptions and then, without warning to the other spouse, introduce for the first time at trial a concept as pernicious as a Watts credit claim to set up an entirely different set of financial assumptions.” Commissioner Richard Curtis (2003)

    8. Marriage of Cairo (1988) 204 Cal. App. 3d 1255. Gambling debts incurred on credit cards during marriage assigned to Husband.

    © 2007 Warren R. Shiell. All rights reserved. The information contained in this website is an “Advertisement.” It is for informational purposes only and shall not constitute legal advice. Nothing in this Website shall be deemed to create an Attorney-Client relationship. An Attorney-Client relationship shall only be created when this office agrees to represent a Client and a Client signs a written retainer agreement.

    By Warren R. Shiell Esq., Attorney at law, at http://www.la-familylaw.com

  • General Property Issues Related to Divorce and Family Law in California.

    Community Property

    California is a community property state. All property that is purchased or acquired during marriage, or transmuted (converted) to community property during marriage is community property.

    The husband and wife in a marriage, each own an undivided one half interest in all community property of the marriage.

    Community property is not divided, unless divorce proceedings are initiated, or upon the death of either the husband or wife.

    Community property can be either real property or personal property. Community property can also be businesses, pension plans, or any other type of tangible thing that is acquired during marriage.

    Community property is ordinarily one of the major issues involved in divorce actions.

    Quasi Community Property

    Quasi community property is property that is acquired outside of the state of California during marriage. Although married couples may have purchased property in a state that is not a community property state like California, the property will basically be treated as though it were community property for purposes division in a divorce action in the state of California.

    Businesses

    Businesses that were started during a marriage are community property.

    In some instances a person may have owned an existing business before they were married, and continue the business after marriage. In a divorce action, the courts will allocate a percentage of value to the business “after marriage” to determine which portion of the business is community property.

    If you owned an existing business before marriage, it is extremely important for you to consult with an attorney in a divorce action as soon as possible.

    Pensions

    Any portion of Pensions, IRA’s, 401(k) s, Retirement plans, etc., that were contributed during marriage are community property.

    Ordinarily the funds from pension plans are not obtainable until the pension plan vests and matures. Therefore special orders are necessary from the court so that each party is able to get their portion of any retirement plan after it matures and vests. These orders are ordinarily called qualified domestic relations orders or QDRO’s for short.

    Obviously parties to a divorce have a vested interest in ensuring that they get their fair portion of any pension or retirement plans after a divorce.

    Community Income, Bank Accounts, Stock, and Investments

    All income earned during a marriage is considered community income. This is true even in one of the parties to a marriage earns money in a business that was theirs prior to marriage. Community income is the same as community property, in that each party owns a one half undivided interest in community income.

    Each party to the marriage has a right to spend and use community income, even if they are not the one that earned the money. However, after legal separation or the initiation of divorce proceedings, parties may only use community property for the necessities of life and to pay their attorney.

    Likewise, any bank accounts, stock, and/or investments that are acquired during the marriage are also community property. This is true even if the bank account, stock, and/or investment is only in the name of one of the parties.

    Some parties try to secret money into separate bank accounts during marriage, and/or hide assets there were acquired during marriage from the other party.

    If you are a party in a divorce action, you have what is called a fiduciary duty of disclosure. What this means is that you must disclose all assets, bank accounts, and other of the investments that were acquired during the marriage to the other party. If you fail to fully disclose your assets and/or income to the court and the other party, the court could severely punish you.

    You may have read about the case where a wife won the lottery, and then initiated divorce proceedings against her husband. She failed to inform the court and her husband about the fact that she won the lottery. As punishment for her failure to disclose the fact that she won the lottery, the court gave her husband the entire amount of the lottery winnings.

    Separate Property

    Separate property is all property that was acquired before marriage; during marriage by devise, will, or inheritance; and after legal separation. The proceeds from a personal-injury judgment or settlement are also separate property, even if they were received during marriage.

    Upon the court making a finding that property is separate property, the person owning said separate property will leave the marriage with their separate property.

    Separate property can be transmuted (converted) to community property by intent, or by inadvertence. For instance, a party may have a separate bank account before marriage that would be considered separate property. If the party then takes income that was earned during marriage and deposits that money into their separate bank account, they may have by inadvertence converted that bank account to community property.

    Obviously, parties in a divorce proceeding will most likely want to keep their own separate property after the divorce is over. It is very important for you to contact an attorney with regard to the issue of separate property to ensure that you get to keep her separate property after the divorce.

    If you are contemplating filing for divorce or are presently involved in a divorce proceeding, you may call our law firm for a free consultation at 818-739-1544 ext. 10, or go to our family law website at http://www.divorce-legal.net .

    By Norman Gregory Fernandez, Esq., © 2006

    Norman Gregory Fernandez is a California lawyer who handles many types of legal matters. You can reach him through his website at http://www.norman-law.com

  • Facebook Takes First Step Toward Full-Fledged Ad Network

    Of course, that is how it should work in theory; the real world is not always so simple. On the same week when Facebook went public, General Motors announced that it was ending its $10 million advertising campaign with Facebook, citing a disappointing lack of results from its attempts to promote its vehicles to Facebook’s users.

    For a company as large as Facebook, such a small amount of money will not affect its financial results, but the symbolism could be far more damaging, which helps to explain its new advertising initiative. By engaging users outside of its own platform, Facebook is hoping to reach users when they are more receptive to advertising. This is one area where Google tends to have an advantage over Facebook: When people search on Google, they are often times looking for something to buy, making them excellent advertising targets.

    With Facebook depending so heavily on adverting revenue to grow its business, it is only natural for the company to seek as many growth opportunities as possible. Given that online and mobile advertising only account for 12 percent of the $600 billion advertising market, Facebook is still not even close to reaching its full potential, even if its user growth is starting to plateau. If Facebook can successfully launch a new advertising network, the company could go a long way toward capturing a large segment of this lucrative market.

     

    Tommy Swanson is a marketing fanatic who has a passion for non-profits. Swanson helps nationally-recognized non-profits and businesses develop their online marketing strategy. He is also a serial entrepreneur who started and sold several businesses in his early teens. …

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