Articles Posted in Mediation

A Canadian judge recently expressed his frustration with a couple who spent over $500,000 on a bitter child custody battle.

“How did this happen?” asked exasperated Ontario Superior Court Justice Alex Pazaratz. “How does this keep happening? What will it take to convince angry parents that nasty and aggressive litigation never turns out well?”

After a 36-day trial, Judge Pazaratz awarded sole custody of the eight-year-old girl to her father, in part it appears, because he was the more reasonable of the two.

Once upon a time, back in the 50’s/60’s when divorce was considered somewhat shameful and there were few of the wonderful, wise and supportive divorce professionals that, with some effort, can be found these days, Bill and Helen divorced.

It was a long, drawn out, torturous divorce that ended badly for everyone involved. (except for the floozy) Bill began sleeping with the town floozy and ultimately, fell in love with her. But he did not have the courage to tell Helen that he had fallen in love with someone else, and instead stayed away for long periods of time, was dishonest about what he was doing, and mean and judgmental with Helen, cruelly criticizing her for not being the woman he wanted, rather than being honest about his choices. Bill attempted to beat up one of his children for calling the floozy a slut. And the floozy was even more cruel and heartless than Bill. Helen was naïve and insecure and worried about what others might think, so did not open up with those who could have helped her. Nor was she able to simply confront Bill and suggest that the marital contract be terminated with as much dignity and respect as could be mustered. Or alternatively, simply ignore him, get some therapy and continue with a separate life while married. Instead, there were ugly fights, many tears and much sobbing, sleepless nights, and an emotional breakdown. Neither parent was present for the children in a meaningful way because, as is so often the case with divorces, the parents were too caught up in their own self-interest (Bill) and pain (Helen).

They lived separately for several years, Bill doing whatever Bill wanted and Helen working at a stressful, low wage job and trying to provide a home for the children. Seeing the pain Bill was causing, the children aligned with Helen and ceased their relationship with him, not even attending his funeral some forty odd years later.

Retirement benefits are often among the most significant assets in play when a couple decides to divorce. The question of how to divide those benefits can be a tricky one that implicates both state and federal laws. As California’s Second District Court of Appeals recently explained, state law in California generally dictates that retirement benefits are community property to be split evenly between spouses upon divorce. Federal law, however, mandates that Social Security retirement benefits remain the separate property of the spouse who contributes to the system during the course of the marriage.

retired-and-relaxing-1565780Husband and Wife separated in February 2010, following roughly 16 years of marriage. Husband, who worked as an attorney, contributed to Social Security through deductions from his paychecks during the course of the marriage. Wife, who worked for a state government entity as an employee of local district attorney’s office, participated in a defined-benefit retirement plan (“LACERA”), in which her employer contributed the full amount. The total retirement benefits available to Wife under her LACERA plan were based on the number of years she worked, her age, and her compensation. The plan also barred covered employees from contributing to or receiving Social Security for the time they served in the district attorney’s office, according to the Court.

Husband and Wife eventually entered into a marital settlement agreement, in which they resolved a number of issues related to the divorce. Among other things, the couple agreed that Husband’s Social Security benefits – valued at $228,000 – were separate property and that Wife’s LACERA benefits – valued at about $215,000 – were community property. Wife later asked a trial court to divide the couple’s property in a way that accounted for this disparity. She said the court should either require Husband to reimburse the community for the Social Security contributions and then divide them equally, or allocate her all of the LACERA benefits to equalize the retirement assets. The trial judge declined, finding that federal law prevented the court from considering Husband’s Social Security benefits in dividing the couple’s property.

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California divorce courts generally consider any property owned by one spouse before a marriage that spouse’s separate property to be kept by the spouse in the event of a divorce. Community property, on the other hand, includes anything that one or both spouses acquire through their efforts during the marriage, and it is typically divided equally between the spouses upon divorce. A recent case from the state’s Fourth District Court of Appeals shows how spouses can change the nature of separate property by specifically granting the other spouse an interest in it.

Husband and Wife were married for roughly 32 years before separating in 2007. Two years earlier, they signed an agreement in which the couple stated that all of the property they owned now and anything they acquired going forward would be considered community property. The spouses were eventually able to resolve many of the issues related to the divorce, but a nine-day trial was also held to consider lingering matters related to property distribution.

Wife argued that the trial court erred in awarding Husband reimbursement for his separate property under Family Code section 2640 because of the agreement to transmute all separate property to community property.

California law operates under a set of guidelines in child support cases that is used to calculate a parent’s support obligations based primarily on each parent’s income and time with the child. The overall aim of the guidelines is to set the support at an amount that attempts to equalize the living standard in both homes. The guidelines calculation is generally presumed to be correct, but there are some circumstances in which a court may choose to order support at an amount lower than the calculated rate. As the Fifth District Court of Appeals recently explained, that includes situations in which the paying parent has an “extraordinarily high income,” and the guideline amount is more than the child needs.

boarder-1536813Mother and Father’s four-year marriage was annulled in 2004, after it was found that Mother was still married to her first husband. They had two daughters:  one born during the marriage, and the other born in 2008. Mother lived in Bakersfield with the children, as well as with a son that she had with her previous Husband and another daughter that Father had from a previous marriage. Father paid Mother more than $17,500 in child support per month for his three children. As a member of the Manuel Band of Mission Indians, Father received annual distributions from the tribe based on its profits from a casino. That money often totaled more than $2 million per year, according to the Court. He wasn’t employed and didn’t have any other sources of income.

Mother went to court in 2012, asking a judge to order Father to pay her at least the guideline child support amount of about $20,000 per month for the couple’s two daughters. The court declined, setting the amount instead at roughly $12,500. It said that the amount “would adequately ensure that the children’s needs will be provided for.” Mother had been receiving nearly this amount from Father for the two kids prior to the ruling, the court said, and failed to show that it wasn’t enough to meet the children’s needs.

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“Dogs are our link to paradise. They don’t know evil or jealousy or discontent. To sit with a dog on a hillside on a glorious afternoon is to be back in Eden, where doing nothing was not boring–it was peace.”
Milan Kundera

It is estimated that about 50% of American marriages end in divorce. It is also estimated that 62% of American households include at least one pet. So, it is reasonable to conclude that many divorces also involve pets.

Do you consider your dog to be a highly adored member of the family? If so, you may be surprised to learn that most family law courts consider your ball-catching canine to be classified as personal property.

Divorces in California almost always include the division of property (assets and debts) between spouses. And sometimes, quite often in fact, the property is a dog. Since most courts consider pets to be personal property just like your toaster or car, judges usually follow the same guidelines they use to determine who gets to keep personal property when couples are dividing things in a divorce. All of this applies equally to cats but for some reason, it is the care and control of dogs more so than cats, that are disputed issues. California’s First District Court of Appeals recently considered a dispute over the family dog.

dog-3-1403648Husband and Wife entered into a stipulated agreement resolving most of the issues related to their divorce. However, they were unable to agree on what to do with Sadie, the family dog. The stalemate led to a two-day trial, after which a judge concluded that the pet was community property. The California Family Code requires community property to be split evenly between spouses. Courts often award the property to one spouse and require that person to compensate the other spouse for his or her interest in the property. Here, the trial judge awarded the dog to Husband, noting that Wife had maintained sole use and possession of the animal since Husband filed for divorce two years earlier.

Wife appealed the decision, arguing that her daughter from another marriage was the dog’s true owner. She said her daughter adopted Sadie and registered the animal with local authorities under her own name. Unfortunately, however, Wife didn’t point to any evidence in the record from the trial court hearing showing that this was actually the case. Moreover, the First District said she didn’t even provide a transcript of the proceedings. A person appealing a divorce decision is not required to provide the transcript of the proceedings, but courts in California typically don’t go and get those records on their own and are likely to presume that the decision was supported by adequate evidence if there is no transcript to review.

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When a divorce involves a business of one or both spouses that is community property, issues of valuation arise, including how and when the business is valued. California’s Second District Court of Appeals recently considered the question of when a business is valued.

business-card-1525590Husband and Wife divorced in April 2012, after entering into a written settlement agreement related to the division of their community property and the payment of spousal support. They weren’t able to agree on one issue, however:  what to do with the small heating and air-conditioning company that the former spouses owned and operated together. Husband managed the company’s day to day work, while Wife was in charge of the business’s marketing and finances.

According to the Court, Husband “frustrated” Wife’s attempts to get information about the business by ousting her from her job, filing for bankruptcy, and refusing to produce financial records or to be deposed about the company’s financial health. He also transferred assets from the business to another business owned by a former employee and managed by Husband. Because of these actions, the trial court eventually decided to value the business based on what it was worth in May 2012 instead of setting the value at the time of a trial on the issue nearly two years later. The court accepted a valuation prepared by business broker and accountant Rodd Feingold, who set the value at about $470,000. Although a separate appraiser – Phillip Sabol – said the company was only worth $47,000, the Court rejected that valuation because it didn’t take into account the business’ goodwill and tangible assets. The court awarded the business to Husband and ordered him to pay Wife half of its value.

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California’s community property system is meant to simplify property division issues in divorce cases by making it clear that all property gained through the efforts of either or both spouses during the marriage is to be split evenly between them. The reality, however, is that complicated issues still arise, including those related to property and income taxes. The state’s Fourth District Court of Appeals recently considered such a case.

accounting-calculator-tax-return-90376-mHusband and Wife married in 1997 and had two daughters before separating nine years later. While their divorce case was pending, the couple entered into a “post nuptial agreement,” wherein they resolved various issues, including their rights to the family home in Southern California. They agreed to list the home for sale and to treat the proceeds as community property, except that Husband was entitled to an additional $2.5 million for separate property funds he had contributed to the residence.

The couple eventually sold the home in 2009 for $10 million. They used nearly $1.4 million from the proceeds to pay state and federal taxes on their estimated capital gains from the transaction. They evenly divided the remaining $3.5 million after covering the additional $2.5 million owed to Husband, as well as interest, fees, commissions, and closing costs. Husband and Wife filed separate 2009 tax returns, with each reporting $5 million in income from the sale of the family home. Husband was required to pay an additional $65,000 in estimated capital gains taxes, while Wife estimated a $475,000 refund because she included the $2.5 million separate property payment as part of her nontaxable basis for the property.

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Gwyneth Paltrow’s announcement on her website Goop last year that she and husband Chris Martin were divorcing presented the views of Dr. Habib Sadeghi & Dr. Sherry Sami, apparently experts on what it means to divorce. Sadeghi and Sami use evolutionary biology and the structure of the human skeleton (“Life is a spiritual exercise in evolving from an exoskeleton for support and survival to an endoskeleton”) in order to explain why a divorce might happen. Good grief. One might think that a simple press release announcing the divorce would suffice, but apparently the star feels the need to use her divorce as an occasion to enlighten us all. Regardless, the impetus and intent behind so called “conscious uncoupling” is a good one.

It is about putting the children first by minimizing conflict and supporting the child’s relationship with the other parent. A thoughtful process can help couples from regressing into immature and harmful behavior. They can be helped to understand why they chose to end the marriage and how the process can be managed without unnecessary harm to any children and without catastrophic financial consequences. Disputes about custody, visitation, and spousal support can be addressed with much less anger if the couple elects to approach the end of their marriage “consciously,” instead of trying to hurt the other person.

The term conscious uncoupling derives from psychologist Katherine Thomas Woodward and the goal is to to negotiate the end of a romantic relationship with goodwill and respect; in a way that enriches rather than wrecks lives. Katherine is a romantic and a realist; a fan of marriage and love who endeavors to explore the possibility that couples seeking her guidance in ending their relationship might actually stay together. But also, she argues that the ideal of lifelong monogamy is antiquated: researching the ‘happy-ever-after myth’, she discovered that it emerged 400 years ago and ‘had a lot to do with the life conditions of the time – many people died before the age of 40’. The Goop article also references the academic journal Evolutionary Anthropology, stating that we are living too long for marriage to one person to be a sensible choice. We are out of evolutionary synch, and shouldn’t feel wretched that we want out, it’s normal.

If you’ve gone to one of those retirement planning sessions lately, you may already know that saving for life after work is not only incredibly important but also can be very complicated. These matters often become even more difficult in divorce cases, where spouses or a court have to decide how to divide savings that the parties can’t actually access yet. California’s Second District Court of Appeals recently considered such a case.

tightened-100-dollar-roll-1377964-mHusband and Wife separated in April 1998 after nearly 11 years of marriage. Husband had been working for the Los Angeles Fire Department for 18 years at the time and was eligible to retire in 2000. The couple entered into a marital settlement agreement in December 2000. The agreement divided the couple’s assets between the spouses and provided that all “income, earnings, employment benefits, or other property” acquired by one spouse after the separation date would be considered the spouse’s separate property. It also stated that Wife was entitled to half of Husband’s pension/retirement plan, due after he reached 30 years of service, if he decided to keep working past his earliest retirement date.

In 2010, Husband began participating in a new LAFD retirement program, the DROP program, which provides firefighters a lump sum payment upon their retirement, along with any monthly retirement allowance to which they are entitled under another plan. As a condition to the program, Husband agreed that his years of service and accrual amounts would freeze upon the date of his entry in the program. Money would be credited to his DROP account during the five-year period, and he would be able to access that money directly upon retirement.

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