April 2018 Case of the Month

Case of the Month

In re Marriage of Schleich (2017) 8 Cal.App.5th 267.

In this case, the lower trial court tried to impose sanctions against the husband under Family Code Section 1101(g) for failing to disclose his separate property, post-separation income, and a car purchased after the date of separation with community property funds. On appeal, the appellate court overturned the sanctions against the husband with regard to the separate property assets. However, the appellate court noted that he may still be liable for sanctions under Family Code Section 2107 for breaching his duty to disclose the funds from the purchase of the car.

However, the husband’s failure to be cooperative and honor his duty to disclose during the divorce haunted him in the end. The wife asked for attorney’s fees due to the husband not being cooperative during the preliminary disclosure and discovery process. The appellate court dropped some of the fees that the wife requested because of the husband’s separate property issue talked about above. But in the end, the appellate court asked the trial court to resolve the attorney fees issue again. Overall, the wife is undoubtedly going to get some attorney’s fees paid for by the husband as a form of sanctions due to the husband not being cooperative during the preliminary disclosure and the discovery processes throughout their divorce.

What this means:

First, the courts cannot take your separate property assets and award them to your spouse as a form of sanctions against you. Second, it will save you more time and money in the end if you are cooperative during the preliminary disclosure and discovery process throughout your divorce.

Duty to Support Immigrant Spouses

When a person marries an immigrant (typically the immigrant spouse comes over on a 90 day fiance visa), the US Citizen spouse often will execute a form I-864 (affidavit of support of immigrant by sponsor). This form is executed to ensure that the immigrant will not become a ward of the state and it requires the US Citizen spouse (or other sponsoring party) to ensure that they will provide a minimum of financial support to prevent the immigrant from obtaining welfare.

This issue has led to confusion in the past over whether or not the execution of an immigration form establishes a duty to pay a minimal amount of spousal support in a Dissolution of Marriage action.  Recently, the California Court of Appeals (1st District) took on this issue and determined that while the trial court may terminate spousal support, the duty to provide a minimal level of financial support to the immigrant spouse continues and that the immigrant has no duty to mitigate or reduce that obligation by attempting to find work.  The case is In Re Marriage of Kumar (2017) California Court of Appeal 1 Civil A145181 13 Cal.App.5 ^th 1072, 220 Cal.Rptr.3d 863, 2017 FA 1800.  The opinion is not yet published but can be found on the Court of Appeals website here: IRMO Kumar

While an appeal has been made to the California Supreme Court and this issue may not yet be settled, it is important for any sponsoring individual to understand that signing an affidavit of support of immigrant form to bring a spouse to the US has long ranging consequences and may supersede the spousal support obligation under California law, which may terminate prior to the obligation under immigration law.

Taxes and Family Law

This information is provided courtesy of:

Jeremy Salvador

MIOD AND COMPANY, LLP
CERTIFIED  PUBLIC  ACCOUNTANTS

27200 Tourney Road, Suite 290
Valencia, CA 91355-5906
Telephone: (818) 898-9911
Facsimile: (818) 898-9922 

777 E. Tahquitz Canyon Way,
Suite 200-164
Palm Springs, CA 92262
Telephone (760) 779-0990
Facsimile (760) 779-0960 

The Trump Administration announced its tax plan, to cut taxes for every child, woman, and man.  But what does that mean for you and me?  From income for support to property division, We will be affected by this reform decision.  So here’s a few things I think you  should know.  The details of which are delineated below:

1. New Tax Brackets for Individuals – Trump’s plan attempts to simplify the tax bracket system from seven brackets (10%, 15%, 25%, 28%, 33%, 35%, and 40%) to three brackets (10%, 25%, 35%). 

2.    Single Tax Bracket for Corporations – C Corporations will be subject to single tax across any taxable income. The proposed tax is 15%.

3.      Eliminate the Alternative Minimum Tax and Estate Tax – The alternative minimum tax (AMT) is a tax that is typically triggered for high earning individuals. The estate tax is typically imposed on estates that hold eight-figures worth of assets or more. Under Trump’s plan these taxes will be eliminated.

4.      Getting Rid of Itemized Deductions – Trump will get rid of most personal itemized deductions to compensate for the three-tiered tax rates for individuals and the single tax rate for corporations. His plan will, however, keep the mortgage interest deduction and the charitable contribution deduction. This change in the tax system could have “yuuuuge” implications for California Family Law. See below:

Traditionally, alimony paid to a current or former spouse has been deductible against the income of the payor. If Trump’s plan gets rid of the personal and itemized deductions, the alimony deduction might be one of them. Settlements and judgements concerning deductible spousal support could have very different discussions.

Legal and accounting fees incurred to receive alimony have also traditionally been deductible as “other miscellaneous expenses” on Schedule A (itemized deductions) because these were expenses incurred in attaining taxable income. This deduction may not be available under Trumps plan. There may still be a way that a client can benefit tax-wise from these expenses. Give me a call if you’re interested in hearing how.

5.  State Tax Deduction – The final issue I think you should be aware of, is the interplay between federal taxes and state taxes. Historically, state taxes paid have been an itemized deduction when calculating federal income taxes. If the state tax deduction is no longer available, that would mean that Trump’s tax plan might actually have a negative consequence.

Overall, it seems like there are going to be some changes coming.

Your Divorce... And Death - Creating a Divorce-Proof Estate Plan

You’ve heard the old saying: “Nothing is certain but death and taxes.” While it’s something that many people don’t like to think about, we’re all going to die someday - and prudent people will plan for their death by creating a thorough estate plan. But there’s one factor that can unduly complicate your estate plan, and it’s something I see families effected by even when they think they’ve got a good estate plan in place: divorce.

Having a divorce can make a huge impact on your estate plan. If you haven’t worked with an experienced, knowledgeable, thorough estate planner to include divorce contingencies in your estate plan, it could create huge headaches for your family and could result in a lot of unintended consequences, including the decimation of your estate or having someone you wouldn’t choose raising your kids.


Plan for Divorce, Even if You’re Happily Married
When we’re happily married, we don’t want to think about the possibility that it could someday end in divorce. But with 40 to 50 percent of marriages ending in divorce, there’s a very real possibility that your circumstances will change in the future. Divorce doesn’t have to be acrimonious; maybe you each get buried in your work or your individual lifestyles, and simply grow apart. But it’s a good idea to include the possibility of divorce in your estate planning, as divorce can dramatically complicate your estate.

Think about a pre-nuptial agreement. When you create a pre-nup, you’re not stating that you expect your marriage to end in divorce. But you are planning for the contingency, just in case. It’s the prudent thing to do. Including divorce contingencies in your estate planning is along the same lines - it’s the prudent thing to do.


If You’ve Been Divorced in the Past, Estate Planning Gets More Complex
If you’ve been divorced in the past, your estate planning gets a lot more complex. This is particularly true if you have kids by a first marriage, and/or if you get remarried. What do you want going to the children of your first marriage, and how do you want to take care of your current spouse and children? Are you still on good terms with your first spouse, and do you want to leave anything to them?

If you’re not extremely explicit in your estate plan, having a prior divorce can dramatically complicate your estate. If children from a prior marriage make a claim on your estate, your family could find itself in probate court for a very long time while a judge attempts to make a fair call. You could find your estate being split in ways you didn’t intend, and could find that your family isn’t provided for in the way that you intend.

This can also be a huge problem if you have children. For example, what if you have kids from a prior marriage, but you have custody, and you and your new spouse are raising your kids? If you should die, will your new spouse become the guardian for your children, or will your first spouse file for custody? Who would you want raising your kids? How could a failure to plan for this scenario impact your children’s lifestyles - to see them ripped away from the family they know and not be cared for as you intended?

And then there’s the money question. If you’re not explicit about what you intend to leave to whom, your former spouse could use your kids by the first marriage to extract huge sums of cash from your estate. If your former spouse has custody of the children, the spouse could easily manipulate the estate to get a huge share of the cash or property. There are many ways the estate planning process can go awry after a divorce, so it’s important to work with an experienced professional to create a detailed, explicit plan for dealing with your estate and caring for your family the way you intend.


Know the Statistics, and Plan Accordingly
Do you know the statistics on divorce? Experts estimate that the lifelong probability of a marriage ending in divorce is 40 to 50 percent. And this statistic may surprise you, but roughly 65 to 70 percent of the time, it’s the wife who files for divorce. Even if you think you’re happily married, your spouse may not share your opinion and you could find your happy lifestyle ending in divorce.

Even if you’re not divorced now, if you are married, or if you could get married soon, it’s prudent to take care of the contingency in your estate planning documents. And if you’re about to get divorced or have recently been divorced, it’s a good idea to review your estate plan with an experienced professional to ensure your estate plan is complete and up to date.

Child Custody 101: Ex Moving Out of State

If your ex is threatening to move out of state with your child, you may wonder what your rights are under California child custody laws. Can your former spouse take your child and move out of state without your permission? If you’re the custodial parent, can you relocate without the other parent being involved? Here’s what you need to know if your child’s other parent is planning to move out of state and take your child with him or her:
Relocation can Only Occur Under Certain Circumstances
Relocation out of state can only occur if:

• All individuals who have custody rights to the child consent to the proposed relocation - OR -
• Court approves the proposed location

What this means for you is that if your ex is planning to move out of state and take your child with him or her, he or she can only do that if you consent to it, and/or the court approves the relocation. An ex or an individual with whom you share legal custody rights can’t take the child and move out of state without your permission unless the court approves it. If the custodial parent moves the child out of state without court approval and/or your permission, he or she is in violation of the custody agreement and may be subject to legal action.
Legal Process to Gain Permission to Move Out of State
When a custodial parent wants to relocate with the child, the former spouses or co-parents should meet outside the courtroom to make a legal agreement that modifies the custody terms. The new agreement should include things like:

• The amount of parenting time each party will have
• How much phone and/or email contact you’ll have with your child
• Travel arrangements for custodial visitation
• Who’s paying for travel for the purposes of custodial visitation

Even if the custodial parent is moving out of state, you still have the right to visit with your child. Travel for visitation may include provisions like: the child will travel to stay with you on school vacations, for certain holidays, or for periods of time over the summer. School complicates custodial visitation for out-of-state family; it isn’t as simple as weekend visitation; but both parents should work together to create a mutually satisfactory visitation schedule.
Once you’ve created a legal agreement to modify the custody terms, you’ll need to get it approved by a judge in order to become a legal part of the custody agreement.
If you and your co-parent can’t agree on a visitation schedule, or you won’t agree to let your co-parent move out of state with your child, he or she will need to go to court to get permission to move without your approval.
Moving the Child Out of State Without Your Approval
It is possible for the custodial parent to move the child out of state without your approval - as long as he or she gets the court’s permission for it. If you won’t agree to grant your co-parent permission to move the child, or if you can’t agree on terms of the move, the judge will rule on the terms of the agreement.
 
In order to get a court order to allow the move, the relocating parent must bear the burden of proof to show that the move would improve both the parent’s and the child’s quality of life, and that the move isn't being done to prevent the child and the non-moving parent from having contact. Things that might constitute an improvement in quality of life include a new, better-paying job, better living conditions, better schools or other improvements.
Both parents must establish the integrity of their respective motives. If the court believes that one parent is threatening to move to “punish” the other parent, or that the parent left behind is objecting purely to cause problems for the custodial parent, or that either parent is acting without the child’s interests in mind, the judge will not be favorable to the party who isn’t acting with good intentions.
In order for the custodial parent to gain permission to move the child out of state, he or she must demonstrate the availability of realistic substitute visitation arrangements between the child and the non-custodial parent left behind. If visitation would be unrealistic or cost-prohibitive, the judge may decide not to grant the custodial parent permission to move out of state.
Ultimately, a move out of state is easiest to accomplish when both parents can reach an agreement. However, it’s possible for one parent to move the child out of state without permission, as long as he or she can get the court to agree. It’s vital to work with a good family law attorney if your ex is threatening to take the child out of state in order to protect your parental rights.

Attorney's Fees and Costs

A recent question was posted to me in a family law forum.  Given that many people ask the same question, I decided to post the question here, along with my answer.

Question: Do I have to pay for my wife's attorney or can the court appoint her a free one?
Question Detail: I served my wife with divorce papers and asked her to meet up with my lawyer so she can straighten everything out for us. She refuses and said that I have to get and pay for her lawyer. She only works part time but and I don't have the money either. I pay all the bills and have two kids. Can't she get a lawyer from the court?

The court in family law cannot appoint an attorney.  You are only entitled to have an attorney in a criminal proceeding.  There is no family law equivalent to a public defender.  However, the each party is entitled to have an attorney if they want and can afford one.  There are several statutes that allow the court to order one side to pay for an attorney for the other side, but the most relevant one to you will be Family Code Section 2030, which states:

" (a) (1) In a proceeding for dissolution of marriage, nullity of marriage, or legal separation of the parties, and in any proceeding subsequent to entry of a related judgment, the court shall ensure that each party has access to legal representation, including access early in the proceedings, to preserve each party's rights by ordering, if necessary based on the income and needs assessments, one party, except a governmental entity, to pay to the other party, or to the other party's attorney, whatever amount is reasonably necessary for attorney's fees and for the cost of maintaining or defending the proceeding during the pendency of the proceeding. (2) When a request for attorney's fees and costs is made, the court shall make findings on whether an award of attorney's fees and costs under this section is appropriate, whether there is a disparity in access to funds to retain counsel, and whether one party is able to pay for legal representation of both parties. If the findings demonstrate disparity in access and ability to pay, the court shall make an order awarding attorney's fees and costs. A party who lacks the financial ability to hire an attorney may request, as an in pro per litigant, that the court order the other party, if that other party has the financial ability, to pay a reasonable amount to allow the unrepresented party to retain an attorney in a timely manner before proceedings in the matter go forward. (b) Attorney's fees and costs within this section may be awarded for legal services rendered or costs incurred before or after the commencement of the proceeding"

While there are other statutes that allow for the transfer of funds to pay attorney's fees, this is the most common section used.  Note that you can get an award of fees before you have actually hired an attorney, so use of this section can get you the retainer you need to hire a quality attorney.

Can my child testify in our family law case?

In 2007, a family law case made its way to the California Supreme Court.  That any case would make it is rare, that a family law case would be taken up is even more rare.  The case, Elkins v. Superior Court (2007), had a profound impact on the way family law matters are heard today and who may testify.

The case, which was filed in Contra Costa County, involved a situation which prevailed there at the time.  Due to limited court time, all family law trials were by declaration (writing) only and you were required to anticipate evidentiary issues and address them in your documents, or your evidence would be thrown out.  This happened to the father, who lost his case on a procedural technicality and fought to the highest court in the state.

The Supreme Court ruled that even family law matters have the right to a trial with live witnesses and to refuse to grant that was a denial of due process.  The Court ordered the state to come up with laws that protected the family law case's due process rights.  The Elkins case resulted in many new forms and new laws.  One of the most significant ones was that, under Family Code Section 3042, children ages 14 and over will be given the right to testify unless the court specifically determines that it is not in there best interests to do so.  

Under 3042, any party to the case or any other individual associated with the case may advise the court of the child's desire to testify and the court will allow it.  Whereas previously, children were almost never allowed to testify, now, their wishes can be heard and a strong voice for the best interests of the child will not be silenced.  As with all potential witnesses, care should be given before putting them on the stand, however in high conflict cases where children have suffered abuse, allowing them to be an active participant in the process can help promote healing while also allowing for a proper resolution of the custody case.