Financial issues in California divorce

Since we’re talking about California divorce this week, I thought I’d add a note on finances, since they seem to be at least one of the top reasons for divorce. Untangling your financial lives can be really tough, even out of court.  Here are some things to consider:

During divorce:

Tax implications – what are the tax implications of your filing status as you go through divorce?  What are the implications of your asset division?

Expert fees – what are your attorney/accountant/child custody evaluator/financial advisor fees going to be?

Support – there are tax implications to paying and receiving child and spousal (or family) support in California. If you just take the highest/lowest amount because funds are tight, you may be in trouble later.

But the divorce process is just the beginning.  You also have to consider the financial aspects of your post-divorce life.  You need to consider these things as soon as possible, and not wait until it’s happened.

Post-Divorce:

Cost of living adjustment – here’s still the same bills, but only one of you is paying them.

Change in auto/home/health insurance costs

Increase in “combined” costs.  Did you share a Netflix account?

Lower savings and discretionary income due to the tightened financial belt.

Loss of assets in the divorce – that retirement home may be gone.

Needing/getting new employment – what do you do if you’ve never worked?

Reduced retirement income or savings – you may have thought you were set for retirement…now what?

The theme for this week seems to be planning.  Planning is you’re thinking of divorce, and planning if you’re in the process of divorce.  Don’t let the process or anything that happens in the process to take you by surprise.  It doesn’t have to if you know what to look for and where to look. Need more help? Click here to make an online appointment.

The divorce process in California

When I first started practicing family/divorce law in California, I wanted someone to walk me through the process, start to finish, so I could understand it as a whole.  What is troublesome, unfortunately, is that all divorces differ in many ways, so looking at the process in general can be tricky.  But let’s try…

In California, the first step in getting a divorce is to file a Petition.  It’s fairly easy, and it doesn’t matter at all which spouse files the Petition (or files first).  There’s no advantage or benefit to filing the Petition over the Response (though there may be some advantages/disadvantages to filing sooner or later, but see an attorney on this…like me!).  To file a Petition in California you have to have lived in California for six months prior to the filing and in the county where you have filed for three months prior to the filing.

Once the Petition is filed (and the UCCJEA if you have children), you may need to file for an immediate court order regarding support, child custody and visitation, property or debt division, or some other urgent manner.  To do this, you file a Request for Order.  For any issues regarding support, you much file an Income and Expense Declaration, showing your – you got it – income and expenses so the court can calculate the appropriate support.

To complete your divorce, not only do you have to agree on child and spousal support, child custody and visitation, asset and debt division and any other issues you may have, but you have to complete your disclosures and obtain a Judgment.  The disclosures are forms: the Income and Expense Declaration and the Schedule of Assets and Debts (which is, you guessed it, your assets and debts), as well as a form showing you delivered these to your soon-t0-be-ex-spouse.  These are required in California, so you must be prepared to share all of your income, expenses, assets and debts with your spouse to get divorce.

You’re now in the home stretch: to obtain a Judgment, once you have everything resolved, you have to file a number of documents with the court.  It can be confusing, and most courts have packets at the clerk’s office to help you complete it.  Of course, a Family Law Coach can always help if you get stuck.  Need more detailed help? Click here to make an online appointment.

Life Insurance and its potential role in California divorce

One of the most difficult aspects of divorce, behind the extreme emotional roller coaster, is the financial aspect. There’s never enough money to go around, and frequently both parties feel like they’re getting the short end of the stick. The reality is that this is just the way it goes when you try to create two households out of one with the same amount of money coming in each month. One associated problem is that the court’s jurisdiction does not extend past a child’s 18th birthday (child support can go on to age 19, but that’s another issue), so the court cannot make orders about who will pay for your children’s education past high school, and how. College costs for a child who is now a toddler are astronomical – somewhere around $250,000-300,000 depending on the school. If you and your ex-spouse do not agree on how you will pay for college, then perhaps it won’t be paid at all. This is where life insurance can come in. Either or both of you can obtain and pay for a policy that will help to fund your children’s education past high school. It’s not very expensive, particularly if the cost is shared, and your child will thank you for putting aside the anger and making a joint effort on behalf of his or her education.

One final note on making that agreement: ensure that you put down in writing (1) what schools the funds will be applicable to (full-time college, trade schools, etc.), (2) what the funds will pay for (just tuition or room and board or books and supplies, or all of the above), and (3) what cuts off the funds (i.e. not attending full-time or grades below a C average).

In addition, life insurance can be taken out on the party who is paying child or spousal support, in the event that the financially-providing party/parent passes.  With the life insurance, the child(ren) and ex-spouse are insured some financial security in the event one parent dies.

Child and spousal support in California divorce

A common issue of serious contention in a divorce or other family law case is support. This is because money is a sensitive and difficult subject in these cases. Often you are dealing with the breakup of a household. Suddenly, the same money that used to support one household now has to support two. It’s tough, and leads to many emotional issues.

Child and spousal support are treated differently, but also the same. Let me explain…

Let’s start with the differences. First, spousal support is not available in a paternity, or UPA, case, but only in a divorce. Second, the judge has discretion to deny a request for spousal support, but cannot deny someone child support. Third, child support is always on the table as an issue, whereas spousal support must be specifically requested in the Petition to be considered.

Spousal support is used to keep each spouse in the same financial position that they were in during marriage. Generally it lasts approximately half the length of the marriage, except in long-term marriages, where it lasts indefinitely (which does not mean forever, but rather it lasts until an indetermined time in the future where it isn’t required anymore). The one receiving support has the legal obligation to become self-supporting as quickly as possible, considering that person’s ability to earn. It is commonly believed that a ten-year marriage is considered long-term, but I saw that the courts did not look at a marriage less than about 18-20 years as being long-term. Other counties may vary.

I already talked about how long child support lasts, so I won’t repeat myself. Child support is used for the health, maintenance and welfare of your child. Given that, it does not mean that you, as a payor of child support, can take your co-parent to court because you do not believe that your child support is being used properly. In California, we trust the parent to spend the child support appropriately, so the court won’t even consider an allegation that someone is squandering child support. At the same time, each parent has the legal responsibility to work to support your child financially. The court may order a parent to work who is not working or not working up to his or her potential.

In the beginning stages of a case, child and spousal support are calculated similarly, using the support calculator (which you can find here: support calculator). Spousal support on a long-term basis is calculated by a judge using a number of factors, including the need of the payee and the ability to pay of the payor.

Is alimony (spousal support) still relevant?

In an interesting an enlightening new article on alimony, the author indicates that spousal support (alimony) should be based more on a case-by-case basis rather than an automatic award as it is in California.  She states that if both parties can support themselves, then there should be no spousal support. In the case of one spouse needing time to get into or back into a career (such as when one has been raising children), then spousal support is appropriate to help the supported spouse get into a career.

This sounds very fair, but I have two problems with it: First, it is hard to create a law around this proposal.  In California, spousal support generally lasts for half the length of the marriage and is intended to even out, as much as possible, the finances of the two parties. Second, in our economic environment, it is hard to make ends meet.  In a divorce, when the couple splits, generally one spouse moves out and in an instant the same amount of money – whether it’s one or two incomes – is supporting two households.  Two rents/mortgages, two sets of utilities, not to mention the initial financial requirement of getting into a home, buying furniture, dishes, etc.  When one spouse makes a great deal more than the other, or even a little bit more, it can be impossible, simply looking at the numbers, for the lower-earning spouse to make it.

I found it interesting that, in the article, the older individuals in the crowd were more in favor of spousal support than the younger.  I would agree that, in younger couples, there is less of a likelihood that one spouse is not working and stays home exclusively.  Many couples now share the parenting responsibilities as well as the financial responsibilities. It does seem unfair for one spouse to have to pay on an ongoing basis for the support of the spouse they are divorcing.  I know this because I have represented dozens and dozens of men and women who have had to pay spousal support.  There is almost always some kind of negative feeling attached to it. But until we have a way to better equalize the earning of couples, I think spousal support will remain.

How to get through your divorce with money, your sanity, and hope for the future: Law, strategy, and everything you need to know but no one tells you

This is the working title of the book I am putting together primarily for divorcing parties in California, but there will be general application for those outside of California.  I am targeting a release at the end of the month and want to be able to help the widest audience.

The topic will include: what to do and think about when you’re thinking of divorce, the initial process, the overall process, emotions involved, hiring a lawyer, the things they don’t tell you that you need to know, finances, child custody and visitation, child and spousal support, property division, debt, negotiation strategies, settlement conferences, trial, specific issues that come up frequently (substance abuse, moving away, for example), completing your case, post-divorce considerations, and where/how to get help.   Each topic will include the “hard” law and strategy as well as the emotional and logistical, common sense aspects and the things no one tells you but you need to know.

Sound worthwhile?

I’ve been thinking about doing this for a while, and this blog is one way of getting the information out there.  But now, I don’t see that there is another publication that combines everything: law, strategy, emotions and all the little things you don’t expect.  Many publications have some of these, but none have all of them together.  I think it’s time to give access to the divorce process to everyone who needs it, and not just those wealthy enough to spend tens of thousands of dollars on attorneys.

What do you think?  Is there a topic you would like me to include?

First Series

With this new blog, I have decided to start it off with a series of family law basic concepts. The series concept works with my ordered brain, which likes things like themes and plans.

In my five years in family law litigation, I met with hundreds of family law litigants. Some were considering starting a family law case, and some had been fighting for years. Each came to me with questions, concerns, and their own knowledge of what a family law case – and hiring a lawyer – was all about. The range of knowledge and experience varied dramatically, but a handful of thoughts come to mind when I think of those I met during that time.

First, family law cases are each unique. Whatever your sister or neighbor or cousin or friend has gone through, received, or tried may not be appropriate in your case. Especially with support, child and spousal (alimony), each case will be distinct and the results will be based on the individual factors of the parties involved.

Second, a little knowledge can be dangerous. If you know a little bit about some aspect of family law, be careful what you do with it because you may hurt yourself. For example, support calculations in California have many intricacies, the result of which may be unpredictable to you. If you’re working on a support calculation, and realize something has been omitted from the calculation, make sure it is something that benefits YOU before you start jumping up and down to have it included.

Finally, if you don’t like who is helping you, whether it’s an attorney or document preparer or a friend, change it. Being involved in a family law case is hard enough. Don’t make it harder by sticking with someone (or no one!) that drives you crazy or doesn’t give you what you need.

I hope you enjoy this series of about 15 or so posts…here we go!