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  • Endgame: Resolving Family Law Cases

    Posted on Monday, January 9, 2017

    Statistically, about 90 percent of civil cases settle out-of-court before trial, but that number may be a little misleading, because it includes suits on sworn accounts and other relatively uncontested civil matters that involve practically no possibility of trial. When it comes to divorce cases, the proportion is probably a lot lower, because many family law issues have little or nothing to do with money. Furthermore, although it is theoretically possible to liquidate family assets, sell them, and distribute the profits between the parties, such a move is usually not in the best interests of the children.

    What follows is an overview of low, medium, and high-conflict divorce cases and some of the costs associated with each.

    Low-Conflict Cases

    All that being said, some marriage dissolution cases do settle fairly quickly, particularly if the couple had little property, or had a premarital agreement, and the parties are still somewhat fond of each other. There is a very strong joint custody presumption in California, and absent rather compelling evidence that such an arrangement is not in the children’s best interest, such as verified domestic violence allegations, both parents usually have roughly equal rights to the children, in terms of legal decisionmaking and physical access. Furthermore, although California is an income-shares state, the child support guideline amount is presumptively reasonable.

    On the property side of the equation, premarital agreements often transform high-conflict divorce cases into low-conflict situations. Although there is absolutely nothing romantic about premarital agreements, which is one reason many couples still do not obtain them, there is nothing romantic about life insurance policies either, and no one would dream of raising a family without such protection.

    Absent premarital agreements, about the only low-conflict property situations are couples who have almost literally no debts or property, and such couples are few and far between.

    Medium-Conflict Cases

    The vast majority of divorce cases in California fall into this middle ground. Typically, there is general agreement on broad principles but sharp disagreement as to the specifics; for example, both parties might sincerely want what is in the best interests of the children, but they may have very different views as to what exactly constitutes “best interests.” Fortunately, the legal infrastructure is geared towards these kinds of cases.

    In most jurisdictions, judges refer all contested matters to mediation. According to the Department of Justice, civil mediation saved litigants over $14 million in 2015. In addition to the substantial cost savings, formal mediation has a couple of other benefits as well.

    First, since mediation is private and much more informal, these proceedings are generally more civil that divorce trials. This civility helps set the stage for effective co-parenting in future months, years, and decades, which is a much better situation for everyone involved. Second, mediation increases control over the outcome, because instead of a judge or jury dictating terms, the parties collectively decided what is in the family’s best interests. In fact, there is evidence that because of this control, mediation increases voluntary compliance, a feature that is enhanced if either party has issues with authority figures.  

    The exact procedure varies by jurisdiction, but in most cases, the parties do not stay in the same room for more than a few minutes during mediation, and that helps the parties send settlement offers back and forth with less emotion.

    High-Conflict Cases

    As mentioned earlier, divorce is often an all-or-nothing proposition, at least to a certain extent, because there can only be one sole custodian of the children. Property division proceedings can be divisive as well, particularly if one party digs in his or her heels and refuses meaningful compromise.

    Typically, the high-conflict cases become apparent early in the process, and that is a good thing, because mediation is largely pointless in many of these situations. So, to get ready for trial, many attorneys focus on:

    Discovery: This is often the most invasive and costly aspect of the divorce process This includes documents, bank statements, calendars, and anything else that may be relevant to the case.  

    Depositions: Technically, this is a part of discovery. Depositions are costly and often time intimidating.  

    Motions in Limine: The trial goes a lot smoother if the judge makes evidentiary rulings in advance. Settlement is theoretically possible at any time, and many divorce cases have settled quite literally on the courthouse steps or as the judge is gathering potential jurors.

    Regardless of the level of conflict in the case, you may need an experienced family law attorney to protect your legal and financial rights in divorce proceedings.  

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  • Dividing Marital Property In California

    Posted on Wednesday, December 21, 2016

    Most states are equitable division states, so in the event of divorce, the court divides marital property on an equitable basis, which is not necessarily the same thing as an equal division. Typically, there is a slight presumption in favor of categorizing property as jointly-owned, but is is not a particularly strong presumption.

    However, California is a community property state, so all jointly-titled property acquired during the marriage belongs equally to both spouses. In a few cases, the judge may divide such property unequally, but that usually only happens if there is clear evidence of inequity that spousal support payments alone cannot address. So, the only dispute in this area may be the correct classification of property as marital or non-marital. As one might expect, such a distinction is sometimes much easier said than done, especially if the parties have been married for more than 10 years.

    As a rule of thumb, any property acquired before the marriage or by gift is separate property, and the increase from separate property (rents, royalties, etc.) is separate property. However, there are many exceptions, as set forth below.

    Premarital Agreements

    Many couples chose to resolve these questions in advance with written spousal agreements. These contracts are a lot like insurance policies, in more ways than one. No one anticipates or wants an early death, but people still buy life insurance. Additionally, they frequently adjust their coverage as their income and responsibilities change. Similarly, premarital agreements are effective insurance against the excessive emotional and financial costs sometimes associated with divorce, and these pacts should be updated every few years, at the minimum. Spousal agreements can label certain property as community or separate, even if the judge would not divide it in that matter; for example, Husband and Wife can agree that the marital residence is community property, even if they used a marriage gift from Husband’s family to make the down payment.

    Like almost all other states, California adheres to the Uniform Premarital and Marital Agreements Act. Under this law, property agreements can cover almost any property division matter and some non-property matters as well, such as succession and inheritance rights and duties. Premarital agreements cannot cover child custody, child support, or any other subject that violates public policy. To break a marital agreement, the challenging spouse must prove that the agreement was:

    Involuntary: Very strong pressure, up to and including a “sign-or-else” ultimatum, usually does not make the agreement involuntary. Instead, the challenging party must establish that the other spouse withheld critical information, making the terms misleading and therefore rendering the agreement involuntary.
    Unconscionable: 70-30 is uneven, but depending on the facts, not necessarily unconscionable. Furthermore, the challenging party must show that the agreement was unconscionable when it was made and based on the information available at the time.
    Generally, spousal property agreements contain severability clauses, so if the judge invalidates one part, the remainder is still in force.

    Personal Property

    If there is no premarital agreement to label property, it is sometimes almost impossible to distinguish between community and separate property. Assume Wife owned a rental house prior to the marriage, and she uses proceeds from a home equity loan against the marital residence to fund improvements on that property. In situations like this, property is commingled, a term that normally applies to company owners using business funds for personal reasons. However, property can also be commingled, if it contains both community and separate property elements.

    Remember, there is a presumption that all property is community property, even if there is relatively clear evidence of commingling. So, to properly divide such property, the challenging party must present additional evidence. In the above scenario, Husband would need to produce receipts showing that the parties used community funds to hire contractors, pay for materials, and so on. Even then, since receipts only show a temporal connection, Husband may need to do more to clearly establish a causal connection.

    Typically, Husband would be entitled to reimbursement for the community expenditure. So, if the couple spent $10,000 updating the rent house, Husband would receive $5,000. In rare cases, commingling results in transmutation, because the influx of separate property effectively changes the property’s characterization. If the house was uninhabitable before the $10,000 investment, Husband might be entitled to a share of the rents as well, because the house may now be community property.

    Special rules apply with regard to pension plans, IRAs, 401(k)s, and other retirement accounts. A Qualified Domestic Relations Order divides these accounts upon divorce, and the nonowner spouse is usually entitled to half the increase in value that occurred during the marriage. To divide the account, the nonowner can usually roll over the funds into a new tax-deferred retirement account, do nothing and collect a proportional share when the owner spouse retires, or obtain a lump-sum payout. Different rules apply for military retirement accounts.

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