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Among the issues that often need to be addressed during divorce is what happens to the family residence. How does a couple divide the house?

In California, unless there is a prenuptial agreement which governs how their property will be divided, all property acquired during the marriage as a result of either party’s work efforts is community property. Property owned prior to marriage or received by way of inheritance or gift is considered separate property. Community property is supposed to be divided equally between spouses. Separate property is confirmed to the spouse who owns that property.

The character of property, whether separate or community, is determined at the time of its acquisition. If it is community when acquired, it remains so throughout the marriage unless the spouses agree to change its nature or the spouse charged with its management makes a gift of it to the other. If a home is purchased during marriage, it is presumed to be community property, and thus the burden is on the spouse asserting its separate character to overcome the presumption.

The presumption applies, for example, even when a husband purchases property during the marriage with funds from an undisclosed or disputed source, such as an account or fund in which he has commingled his separate funds with community funds. In community property states such as California, property ownership turns on the method and timing of acquisition of the property.

Some might ask what happens to a house that is acquired when living somewhere other than California at the time acquired. Is it treated the same? The answer to that question is yes. Property acquired by either spouse while domiciled elsewhere, which would have been community property if the spouse who acquired the property had been domiciled in California at the time of its acquisition, is called quasi-community property. That too, must be divided in a divorce.

Even if a home is purchased by a couple during marriage, that does not mean that upon divorce the equity in the house will automatically be divided equally. If, for example, the wife made the down payment on the house with monies she inherited, or was gifted, or that she earned before marriage, she would be entitled to be reimbursed for the down payment notwithstanding that title to the home is held jointly.

California Family Code Section 2640 provides that unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party’s contributions to the acquisition of property to the extent the party can trace the contributions to a separate property source.

That said, the amount reimbursed is without interest and may not exceed the net value of the property at the time of the division. Notably, contributions to the acquisition of property include not just down payments on property, but also payments for improvements or payments that reduce the principal of a loan used to finance the purchase or improvement of the property. In contrast, they exclude payments of interest on the loan or payments made for maintenance, insurance or taxes.

What if a wife similarly contributed separate property monies to a separate property house belonging to the husband? The answer to that question is wife is also entitled to reimbursement for that contribution unless there has been a written transmutation waiving the right to reimbursement.

To further complicate matters, and much to the surprise of some, the community can acquire an interest in a home that a spouse owned before marriage in his or her name only. If, for example, the husband owned a home before marriage but after the marriage continued to make the mortgage payments with monies he earned during marriage, at the time of divorce we determine how to apportion the equity in the home based upon the amount of the separate property obligation paid off with community funds.

Yet another question to be asked is what happens when a spouse’s name is added to the title of the other spouse’s separate property residence during marriage? How do you calculate who gets how much? This would require a determination of the fair market value of the property at the time of the conversion to joint ownership less the outstanding encumbrances and less any community property contributions prior to the conversion. A refinance during marriage may drastically change the equation. If the lender looks to the spouse’s earnings during marriage as the source for repayment of the loan, then it will be held to be a community contribution, regardless of whether the underlying security was that spouse’s separate property.

As is apparent, due to the complexities of these calculations, in the event that you or a loved one is going through a divorce where valuing or dividing the equity in a home is one of the issues, it is wise to consult competent family law counsel before entering into any agreements concerning same.

(This article appeared in the August 2023 issue of Living Brentwood)

When couples split up, a question often pondered by both husbands and wives is how can I continue to afford my lifestyle. That is especially true in families where one spouse has given up a career to take care of the children and run the household. In California, when the court is asked to determine support, the court will order the higher earning spouse to pay the lesser earning spouse monthly spousal support (historically called alimony). The first question is: how much money will the court order? And will that amount of money change over time and for how long will the spousal support order last? The purpose of spousal support while the parties are going through the divorce is to allow the supported spouse to maintain the status quo, but at the end of the proceeding, the court makes a different order. At that time, the court may order one party to pay for the support of the other party in an amount, for a period for time, that the court determines is “just and reasonable,” taking into a consideration a whole host of circumstances that are outlined in the Family Code.

Those factors to be considered include among them the extent to which the earning capacity of each party is sufficient to maintain the marital standard of living. How much can the payor pay and still have money left over to pay for his/her own living expenses? Also relevant is the marketable skills of the supported party, the job market for those skills, the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills. The supported party is expected to go back to work if possible, so the court may consider the possible need for retraining or education to acquire other more marketable skills or employment. Even though mom, for example, gave up her career to have children, what would be required for her to re-enter the workforce? Would she need to go back to school?

The court is also supposed to consider the extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties. The court may take into account if the supported party contributed to the support payor’s attainment of an education, training or career. If wife gave up her promising career in the entertainment business, for example, to support her husband in the attainment of his professional goals, that is supposed to count for something. Of course, the real question is, after the court has considered all the relevant factors, how does it actually arrive at a monthly dollar amount. The answer to that question in California is typically by the use of a computer software program titled Dissomaster that was originally devised to calculate just child support (which is different from and in addition to spousal support). The court inputs certain information including for example, the income of each party (both from earnings as well as investment), the tax filing status of the parties, the amount each party pays for health insurance, if either party owns a home, the mortgage interest and property tax paid relating to same, and the percent of time each parent has custody of the children if relevant. The Dissomaster then magically calculates a dollar amount for both child support and spousal support.

The court is required to order the Dissomaster’s guideline for child support if relevant (i.e., if there are minor children), but as to spousal, the court may rely on that dollar amount only when ordering the temporary spousal support during the divorce proceeding, which can sometimes last for years. However, the court is absolutely not allowed to rely on that computer formula when arriving at the spousal support amount in the final judgment at the end of the divorce process. Then, a judge is supposed to consider all the relevant factors outlined in the Family Code section, as well as any other factors the court determines are just and equitable. Usually, the court’s final spousal support orders are a bit less than the amount ordered at the temporary stage. And, of course, the next question is, how long will the spousal support last. That typically depends upon the length of the marriage. If the duration of the marriage is less than 10 years, the rule of thumb is to expect spousal support to be ordered for half the length of the marriage. If the marriage is for longer than 10 years, then the duration can be difficult to predict. Presumably, the family court will not treat a 34 year marriage the same as a 12 year marriage. Another factor that can play into the decision is the age and health of the parties. A 76 year old man or woman who was married for 40 years will not be treated the same as a 43 year old who was married for 15 years. Notably however, income earners are not required to work forever, and when they retire, they are entitled to seek to modify or even terminate their support obligation.

Because of the complexity of this area of the law, it is important to consult competent family law counsel. If you are considering divorce and have, for example, given up your career to focus on caring for the family and will most certainly need financial assistance from your spouse, the process can be unpredictable. Similarly, if you are the higher earning spouse, you too should understand how a court could view your obligations and how to potentially limit them. Moreover, the timing of when you get divorced matters, as for example after 9 years of marriage, 14 years of marriage or 39 years of marriage. The length of the marriage and even the timing and circumstances of separation can impact the duration of the spousal support order. Parties need to obtain the advice of experienced legal counsel before making a decision about ending your marriage, since that decision will have not just emotional trauma, but also long lasting financial consequences on you and your family.

 

(This article appeared in theMidlife on May 16, 2023)

 

When couples split up, both spouses ponder: How can I continue to afford my lifestyle?

That is especially true in families where one spouse has given up a career to take care of the children and run the  household. In California, when the court is asked to determine support, they will order the higher earning spouse to pay the lesser earning spouse monthly spousal support (historically called alimony). But how much money will the court  order? Will that amount of money change over time? And for how long will the spousal support order last?

The purpose of spousal support while the parties are going through the divorce is to allow the supported spouse to  maintain the status quo. But at the end of the proceeding, the court makes a different order. At that time, the court may order one party to pay for the support of the other party in an amount, for a period for time, that the court determines is “just and reasonable,” taking into a consideration a whole host of circumstances that are outlined in the Family Code.

Those factors include among them the earning capacity of each party. How much can the payor pay and still have money left over to pay for his/her own living expenses? What are the marketable skills of the supported party, the job market for those skills, the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills?

The supported party is expected to go back to work if possible, so the court may consider the possible need for retraining or education to acquire other more marketable skills or employment. Even though mom, for example, gave up her career to have children, what would be required for her to re-enter the workforce?

The court is also supposed to consider the extent to which the supported party’s present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party to devote time to domestic duties. The court may take into account if the supported party contributed to the support payor’s attainment of an education, training or career.

Of course, the real question is, after the court has considered all the relevant factors, how does it actually arrive at a monthly dollar amount?

In California it’s typically by the use of the software program Dissomaster, originally devised to calculate only child support. The court inputs information including for example, the income of each party (earnings as well as investment), their tax filing status, the amount each pays for health insurance, if either party owns a home, the mortgage interest and property tax paid relating to same, and the percent of time each parent has custody of the children. The Dissomaster then magically calculates dollar amounts for both child support and spousal support.

The court may rely on the spousal amount calculated only when ordering temporary spousal support during the divorce proceeding. However, the court is absolutely not allowed to rely on that formula when arriving at the spousal support amount in the final judgment at the end of the divorce process. At that point, a judge is supposed to consider all the relevant factors outlined in the Family Code section, as well as any other factors the court determines are just and equitable.

Usually, the court’s final spousal support orders are less than the amount ordered at the temporary stage. The duration typically depends upon the length of the marriage. If the marriage lasted less than 10 years, one can expect spousal support to be ordered for half the length of the marriage. If the marriage is for longer than 10 years, then the duration can be difficult to predict. Presumably, the family court will not treat a 34-year marriage the same as a 12-year marriage.

The age and health of the parties can play into the decision also. A 76-year old person married for 40 years will not be treated the same as a 43-year-old who was married for 15 years. Notably, however, income earners are not required to work forever, and when they retire, they are entitled to seek to modify or even terminate their support obligation.

Because of the complexity of this area of the law, it is important to consult competent family law counsel. If you are considering divorce and have, for example, given up your career to focus on caring for the family and will most certainly need financial assistance from your spouse, the process can be unpredictable. Similarly, if you are the higher earning spouse, you too should understand how a court could view your obligations and how to potentially limit them.

Moreover, the length of the marriage and even the timing and circumstances of separation can impact the duration of the spousal support order. Parties need to obtain the advice of experienced legal counsel before making a decision about ending a marriage, since that decision will have not just emotional trauma, but also long lasting financial consequences on you and your family.

(This article appeared in the April 2023 issue of Living Brentwood)

 

The Constitution of the State of California
article 1, section 1 provides that people
have a right to privacy. What happens to
that right to privacy, however, when your spouse files for divorce? Does your constitutional right to privacy disappear into thin air? I think folks would be surprised to learn the answer to that question!

For starters, your spouse can obtain all material facts and information relevant to your finances. For example, if the
husband is a minority shareholder in a corporation, the records of the corporation or partnership need to be made fully available when the wife’s need for the records outweighs the company’s privacy interests.  These records include bank records, corporate books, business tax returns, profit and loss statements, accounts receivable and payable, ledgers, leases, credit card statements and offers to purchase the company.

That also means documents relating to other members of the company to the extent relevant to the husband’s financial interests, although such information will likely be subject to a protective order so the wife cannot disclose it outside of the divorce proceedings.  Spouses are also entitled to request records that pertain to expense reimbursement, perks, loans, retirement, compensation and money paid to third parties on their behalf. The law favors complete disclosure of all relevant information to allow an independent review of the marital property and financial status of the spouses.

But what about your medical records? Let’s suppose that a husband sees a therapist. Now husband and wife are getting divorced and husband seeks visitation with the children. Can the wife subpoena the husband’s medical and/or psychiatric records to prove that he suffers from emotional instability of such a nature that he should not be allowed visitation? Does the husband waive his privilege merely because he has asked for visitation orders?

Thankfully the answer to that question is no. The husband’s medical
records would be deemed privileged, which is not waived merely by
seeking visitation with his children. That is because a patient has a
statutory privilege to refuse to disclose, and to prevent another from
disclosing, any confidential communication between the patient and a
physician, or between the patient and a psychotherapist absent waiver
or some statutory exception to the privilege.

However, not every therapist has a thorough understanding of what they should and should not disclose so it is important when going through a divorce to work with counsel who is competent in handling such issues. Because while the husband might have the right of privacy, if the rights are not properly invoked, they could potentially be waived.

What about your text messages, email communications or social media posts and activities? Can your spouse get his or her hands on those? In short, they are almost always fully discoverable and must be produced. Again, the exception would be if the communications are subject to a specific statutory privilege, like medical records.

Then there are copies of your credit card bills. Can spouses get copies of those bills when you are going through a divorce? Of course they can. Again, skilled counsel might be able to limit the scope of the information produced (for example, perhaps the nature of the charge is redacted but the amount of the charge is shown) but I think it would be a mistake to presume that you are going to be able to keep those billing statements (whether related to the time period during marriage or after separation) from your soon-to-be ex-spouse.

Often, in heavily contested divorce proceedings, lawyers are looking for a misuse of the marital community’s assets, such as paying for a paramour’s apartment or buying expensive jewelry for a lover. It is not just about lifestyle or support issues, it is about whether a spouse breached his or her fiduciary duty to the other spouse. Hotly contested divorces raise all types of issues, which means that the general right of privacy between spouses is virtually non-existent.

But what is left are specific statutory privileges: doctor/patient, lawyer/client, and clergy/penitent. Of course, these can be waived if not carefully preserved, or sometimes the privilege is joint between husband and wife, which means that between them there is no privilege at all.

Simply put, privacy and privilege issues are quite tricky in divorce, so when going through it, one should recognize that while some rights remain intact, most likely will not. Only a competent divorce professional can navigate this sticky wicket.

(This article appeared in the November 2022 issue of Living Brentwood)

 

Stephanie I. Blum’s article Divorce:  What Happens When One Parent Wants To Move Away? is published in the July 2022 edition of Living Brentwood.

 

Stephanie I. Blum’s article How to Divorce in the Best Interests of the Children: Part 2 is published in the March 2022 edition of Living Brentwood.