• Property Division: Who Gets What In A Divorce/Dissolution

    Following a divorce, the court must divide the property between the spouses. Before legislatures equalized property allocation between both spouses, many divorce statutes substantially favored property allocation to the wage-earning spouse. According to a Cornell University Law School publication, these statutes greatly disadvantaged women disproportionately because during the 18th, 19th, and early-20th centuries, the participation of women in the workplace was much less than it has become during the latter-half of the 20th century and early part of the 21st century. The statutes failed to account for the contributions of the spouse as homemaker and child-raiser.

    With regards to property division today in Los Angeles and Glendale family law specialists note that modern courts operate more precisely when dividing property between two parties. Courts today recognize two different types of property during property division proceedings – marital property and separate property. Marital property constitutes any property that the spouses acquire individually or jointly during the course of marriage. Separate property constitutes any property that one spouse purchased and possessed prior to the marriage and that did not substantially change in value during the course of the marriage because of the efforts of one or both spouses. If, according to top family attorneys Los Angeles property-owning spouses (or individuals) trade the property for other property or sell the property, the newly-acquired property or funds in consideration of the sale remain separate property.

    Modern division of property statutes strive for an equitable division of the marital assets. An equitable division does not necessarily involve an equal division but rather an allocation that comports with fairness and justice after a consideration of the totality of the circumstances. Recently, we spoke with Glendale divorce lawyers who explain that by dividing the assets equitably, a judge endeavors to effect the final separation of the parties and to enable both parties to start their post-marital lives with some degree of financial self-sufficiency. While various jurisdictions permit recognition of different factors, most courts at least recognize the following factors: contribution to the accumulation of marital property, the respective parties’ liabilities, whether one spouse received income-producing property while the other did not, the duration of the marriage, the age and health of the respective parties, the earning capacity and employability of the respective parties, the value of each party’s separate property, the pension and retirement rights of each party, whether one party will receive custodial and child support provisions, the respective contributions of the spouses as a homemaker and as a parent, the tax consequences of the allocations, and whether one spouse’s marital misconduct caused the divorce.

    Los Angeles family law experts tell us most jurisdictions also give the family court judge broad jurisdiction by providing judges with the right to consider any other just and proper factor. When assigning property, judges cannot transfer the separate property of one spouse to another spouse without the legislature having previously passed an enabling statute. Whether such an enabling statute exists varies between jurisdictions.

    http://www.selfgrowth.com/articles/Who_Gets_What_In_A_Divorce_Dissolution.html

  • 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

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  • 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

  • 5 Things To Do Before You Even Think About Getting A Divorce

    There are many steps to take to protect yourself in a divorce. This article will get you started. Your best bet is to talk to a lawyer before you do anything.

    1. Talk to a Marriage Counselor or other professional who may be able to help you save your marriage.

    Even if you don’t think there’s hope for the marriage, “divorce counseling” can help you discover what went wrong, how to cope, and how to pick up the pieces and go on. Don’t wait for your spouse to participate. If you don’t know how to find a qualified counselor, our firm will be glad to recommend one or you can check out the directory of professionals at stayhappilymarried.com. Your employment, social or religious contacts might also provide leads.

    2. Talk to an attorney before you do anything.

    Even if you don’t end up hiring an attorney to handle your separation or divorce, you would be well advised to get as much information as you can before you even discuss divorce with your spouse. There’s a lot to know about divorce in North Carolina…our laws are complex and even the simplest situation can be very confusing to families already in distress. Actions you take now may very well affect the outcome of your divorce (see #3) and you need to understand your options ahead of time…not some time down the road when it may be too late to alter the outcome. Click here to find attorneys who are well versed in the intricacies of North Carolina divorce law.

    3. Do not move out of the marital home without talking to an attorney first.

    Leaving the house without a good reason may cause you to pay alimony or may result in your inability to collect alimony. If you leave the house, you may also be unable to return until after a court divides the property. This process might take more than a year. The best advice is to stay in the house until after you talk with an attorney unless your spouse is violent. If your spouse is violent, you must take all steps necessary to protect yourself and your children.

    4. If you have been involved in any extramarital affairs, talk to a lawyer before you discuss this with your spouse or anyone else.

    In this case, honesty may not be the best policy. In addition to the fact that adultery is illegal in some states, admission of an affair can have other dire consequences. If your spouse is a candidate for alimony, any illicit sexual behavior on your part (during the marriage…which includes the time you are separated) could end up costing you thousands in additional alimony payments.

    5. Take concrete steps to safeguard your assets before you and your spouse begin discussing divorce.

    One of these steps is to take possession of certain assets during separation, especially those assets you wish to be using, such as furniture and vehicles, and those assets that might be liquidated by your spouse, including precious gems and stones, other collectibles, cash, and bearer bonds.

    Another self-protective step is to file what is known as a Lis Pendens in the Deeds Office of any county where you and/or your spouse own real property. The lis pendens puts third parties on notice of your claim to have an interest in the real estate against which the lis pendens is docketed. The lis pendens is basically a notice of pending litigation that may affect real property. A properly recorded and served lis pendens clouds the title to the property, preventing an effective sale of the property behind your back. The rules regarding a lis pendens contain very specific requirements, all of which are spelled out in section 1-116 and the following sections of the North Carolina General Statutes.

    A third possible step to protect the assets of your marriage is to get an injunction restraining your spouse from transferring or otherwise disposing of any property covered by the restraining order. Your attorney can also use an injunction to get your separate property returned to you, where your separate property is in the possession of your spouse and the spouse refuses to give it to you. The equitable distribution statute also provides a means for you to obtain an interim distribution of marital property, pending a final resolution of the property matter. Such an interim allocation could, for instance, give you much needed funds on which to live.

    Other protective measures you might consider in your divorce planning include: (1) protecting your own credit rating by freezing or closing joint cards and by blocking your spouse’s access to other joint credit such as a home equity loan; (2) closing joint bank accounts and opening accounts in your own, individual name; (3) changing the name of the responsible party on utility and other bills; and (4) spending where possible your spouse’s separate property first, marital property next, and your own separate property last.

    While this list will help you get started on the right track, it is by no means a complete list of all the things you need to do and know if you are considering a divorce. For more information about the rights and duties of separating and divorcing husbands and wives visit http://www.rosen.com. You’ll find a complete law library, downloadable divorce forms, a legal fee calculator, a child support calculator, lists of professionals who can help you and stories from people just like you who have survived divorce.

    Lee S. Rosen is a Board Certified Family Law Specialist and founder of Rosen Divorce in North Carolina. Rosen Divorce is the largest divorce firm in the Southeastern United States. For more information visit http://www.rosen.com.

  • Divorce Advice: Assets And Property Division (Part 4 Of 4)

    When a couple is divorcing, dealing with the issue of dividing up assets and property can be a difficult and stressful process. Property division can occur in one of two ways. Often, a couple that is divorcing will decide how to divide their property and assets themselves (perhaps with the help of a mediator). If the individuals are unable to reach an agreement, the matter will go to trial. A judge will consider all of the evidence presented and will use state law to divide the property.

    There are two legal theories that govern how marital property is divided: community property and equitable distribution. In a few states, all property of a married person is classified as either community property (owned equally by both spouses) or the separate property of one spouse. In the event of a divorce, community property is generally divided equally between the spouses, while each spouse keeps his or her separate property. However, a majority of states use the law of equitable distribution, under which all assets and earnings acquired during marriage are equitably divided. In equitable distribution states, the court determines a fair and reasonable distribution that may be more than or less than 50% of any asset to either party.

    Tip #1: Take this process very seriously, as most property division agreements are final. It can be very difficult to get out of or change a property division arrangement to which both parties have agreed or a court has ordered. In most states, there is an established period of time after a court enters its decision on property division during which one of the parties can request that the court reconsider its decision, but these requests are often denied. In general, a judge will reevaluate a property division arrangement only if one spouse engaged in fraud, hid assets, or some substantial mistake was made.  If your case involves neither fraud nor a mistake but you still want to challenge the court’s division of property, your only option is to file an appeal, which can be very costly.

    Tip #2: Beware of hidden assets. There are a number of ways in which a spouse may hide, undervalue, or disguise assets. Some of the most common ways that assets are hidden include income that is unreported on tax returns and financial statements, custodial accounts set up in the name of a child, cash in the form of travelers’ checks, retirement accounts, and collusion with an employer to delay bonuses, stock options, or raises until after the property division has been finalized. It can be very difficult to find these items and get the proof needed to show the court that they exist. Litigation may provide helpful formal discovery procedures, such as depositions.  Hiring a forensic accountant or a private investigator are additional steps that can be taken to uncover hidden assets.

    Tip #3: Be forthright and honest when it comes to your own assets, and make sure you list them all on your case information statement. “It’s important to list all your assets. Just because you think your spouse may not be entitled to an asset is not a reason not to list it because when you sign the case information statement, you certify that everything is true. If there is a trial, it can be used in cross examination… To deliberately leave something out is probably one of the biggest mistakes that you can make,” explains New Jersey divorce lawyer Bonny Reiss. “If you think your spouse isn’t entitled to share in an asset, there’s a place to say why, at least in a word or two, but make sure you list the asset,” Reiss adds.

    Divorce cases involve many different types of issues, including preparing for your divorce, child custody and visitation, child support, and alimony all of which have been addressed in this series.

    For more divorce advice, refer back to Parts 1, 2, and 3 of this series:

    Part 1: Divorce Advice: Preparing for Your Divorce

    Part 2: Divorce Advice: Child Custody and Child Visitation

    Part 3: Divorce Advice: Child Support and Alimony

    Liz Ryan is a Writing and Content Specialist for Lawyer Central. Visit Lawyer Central’s Divorce Resources for legal information about divorce and to find an experienced divorce lawyer. Discuss divorce and related issues on the Law Forum.

  • Property Issues in California Divorce

    Steel Panther "Community Property" (Making of) DIRTY – watch more funny videos

    What is Community Property?

    California is a community property state in which spouses are entitled, with some exceptions, to an equal division of community property and debts in a divorce (called dissolution in California).

    Community property is all property, in or out of state, that either spouse acquired during the marriage through the efforts of either spouse or with community property funds. This means that, even if only one spouse worked during the marriage and the other stayed at home raising children, both spouses are entitled to one half of the community property. “During marriage” refers to the time period from the date of marriage to the date when the parties legally separate. The date of separation is often contested because it determines the extent of the community property estate. The courts have said that separation occurs where one spouse subjectively intends to end the marriage and does something to evidence that intent. It could be moving out of the family home, telling your spouse the marriage is over, arranging for a new place to live, etc.

    What is Separate Property?

    The parties are entitled to keep their separate property which is not divided in a dissolution. Separate property is any property that is acquired before the marriage, including any rents or profits received from those items; property received after the date of separation with separate earnings, inheritances that were received before or during marriage; and gifts solely to one spouse.

    Do debts and credit cards also have to be divided?

    Debts are also classified as either community or separate property debts. With few exceptions, debts incurred during the marriage are community property debts that will be divided equally in the dissolution. It does not matter whose name is on the debt.

    For example, credit card debts incurred during the marriage are community property debts regardless which spouse’s name is on the credit card. Student loans are one of the main exceptions to this rule. In certain circumstances, the community may be entitled to a re-imbursement if the couple pays off one spouse’s student loans during the marriage. Debts that you incurred before marriage or after separation are separate property debts.

    What happens to the Family Home?

    The family home in California is often the marriage’s most valuable asset. The division of the family home can be complicated if there are minor children and one spouse wants to stay in the home. The community property interest in the home is further complicated where the property is in the name of one spouse and was acquired prior to the marriage but the mortgage payments have been paid from community earnings. Parties should also be aware that if one spouse remains in the property after separation they may be incurring indebtedness to the other party if the fair rental value of the property exceeds the mortgage, taxes and insurance payments on the home. These are called Watts claims. The reverse may also be true. If the spouse living in the house is paying the mortgage which exceeds the fair rental value, they may be entitled to what’s called Epstein credits.

    Am I entitled to a share in my spouse’s pension?

    Another valuable asset in a marriage is a pension or retiremement plan. The non-employee spouse is entitled to a portion of the plan that was earned during marriage. To ensure that any pension settlement is enforceable it is advisable that any settlements regarding pensions are contained in a “Qualified Domestic Relations Order” (QDRO) signed by the Court.

    How do I figure out the extent of my husband or wife’s property?

    Each party is required by California law to file a preliminary and final “declaration of disclosure” with the Court that they have served an Income and Expense Declaration and Schedule of Assets and Debts on their spouses. The final declaration can be waived by the written agreement of the parties. The disclosures will list each spouses community property assets and debts and separate property. Most disputes involve the extent and valuation of community property assets. If a spouse tries to hide assets, your attorney can employ various discovery tools forcing a spouse or a third party to turn over financial records. For example, they can subpoena the records of third parties such as banks and CPA’s. In complicated cases it may be necessary to employ the services of a forensic accountant. It is a good idea to minimize this risk by taking some simple steps as part of any pre-divorce planning. You should make copies of important financial documents such as tax returns, W2′s, bank and brokerage statements and keep them in a safe place.

    The law requires the parties to make full disclosure of all their assets and liabilities and also any business investments and opportunities. The case of Marriage of Rossi, illustrates what can happen when one party tries to conceal assets. In 1996 Denise Rossi won $1.3 million in the California State Lottery. She chose to conceal the winnings from her husband and filed for a divorce 11 days after learning of her winnings. She had been married for 25 years. 2 years after the case was over and a Judgment had been entered, her ex-husband discovered that his ex-wife had won the lottery. He filed a Motion and the judge gave all of the $1.3 million dollar lottery winnings to the husband, since the wife had intentionally not disclosed her winnings in the divorce proceedings. News reports indicate that Denise ended up filing for bankruptcy.

    Don’t forget some often overlooked assets!

    Some assets that are easily overlooked but may turn out to be valuable include:

    o Tax refunds

    o Frequent flyer miles

    o Season tickets

    o Prepaid insurance

    o Vacation pay

    o Club memberships

    Are their tax consequences of a property settlement?

    It’s important that you consider the tax consequences of any property settlements during a dissolution. Generally, IRC section 1041 provides that transfers to a former spouse incident to a divorce are not taxable. However, if either spouse agrees to sell an asset as part of a settlement there may be a tax consequence. For example, if parties agree to sell the family home and divide the net proceeds they may have to pay capital gains tax on any gain. The Tax Reform Act 1997 gives each spouse a $250,000 exemption from gain realized on the sale or exchange of the principal residence. Similarly, the tax consequences of distributions from pension plans now or in the future should also be considered.

    © 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