Bay Area Divorce Lawyer Blog

Child Support Woes of the 1%

There aren’t many whose earnings can make those of the Buffets, Kochs, Adelsons, Waltons and the like look paltry. But according to filings in his divorce case, billionaire hedge fund manager Ken Griffin may be one of them. Griffin’s ex-wife, Anne Dias, said his monthly gross income “approaches $100 million,” and his net monthly income after taxes “averages over $68.5 million.”

For those of us to whom such numbers do not even compute, that works out to $2.2 million a day, or upward of $90,000 per hour.

Child support payments are intended to help cover kids’ basic costs, including money for food, clothing, and shelter. Sometimes, other costs come up. As California’s Fourth District Court of Appeals recently explained, any healthcare-related costs that arise along the way are usually considered additional child support costs to be split evenly between divorced parents.

tightened-100-dollar-roll-1377964-mHusband and Wife separated in 2007. A court awarded Husband primary custody of the couple’s daughter in 2012 and ordered Wife to pay him $540 in monthly child support. The court also ordered Husband to pay Wife $1,800 in monthly spousal support. In reaching the decision, the court found that Wife was making about $2,000 per month, while Husband was bringing in roughly five times that amount.

Father went back to the court about five months later, informing it that a juvenile court had ordered the couple’s daughter to spend four months in an inpatient substance abuse program in juvenile hall or be placed in an inpatient rehabilitation facility. Father asked that Wife be ordered to pay half of the $8,000 per month it was going to cost to send Daughter to the out-of-state facility. He said Wife had insisted on sending Daughter to an inpatient facility and had agreed to foot half of the bill. Husband added that his savings were rapidly depleting and that he could no longer afford to pay spousal support, since he was paying for Daughter’s care.

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Many divorcing couples who wish to resolve the issues in their divorce with their personal and economic dignity intact, preserve or create a positive co-parenting relationship for the benefit of their children, save money and preserve assets, or for a host of other good reasons, choose mediation or Collaborative Divorce rather than litigation and traditional attorneys. Such folks tend to see divorce as a problem to be solved rather than a battle to be won.

But whatever process is used, divorce in California requires that a Petition for Dissolution and Summons be filed by one spouse and served on the other spouse in order to commence the dissolution process and to establish the court’s jurisdiction to terminate the marriage.

The Summons, in particular, can be problematic. The first page states, “You are being sued” and “you have 30 days to respond” and the second page sets forth numerous rules called automatic restraining orders. It is not uncommon for spouses who are trying to work together in a civil and respectful process to be shocked and somewhat hurt when faced with a document telling them they are being sued by their spouse.

In a new commercial in India for Tanishq jewellery, a woman preparing for her wedding puts on a Tanishq necklace. At the ceremony, her daughter calls her asking if she can participate in the pheras, an Indian ceremony where the couple walk around a fire seven times while saying their vows. The groom is moved by the girl and picks her up, filling his bride with emotion.

A non-Indian would likely miss this point, but it is clear in the ad that this is a second marriage for both bride and groom, and since historically in India, divorced or widowed women are outcasts, the ad is contrary to Indian tradition. The ad is apparently causing quite a stir in India with viewers talking about the cultural taboos and also about the bride’s relatively dark complexion, a turn away from the country’s mainstream obsession with light-skinned lead actresses.

The ad has sparked conversations on Twitter, with celebrities and politicians also weighing in. Parliament member and industrialist Naveen Jindal praised the bride’s darker skin tone and the non-traditional marriage. Apparently, the team that created the ad chose the actors to ensure the couple would look like one of respectable equals, because otherwise traditional-minded Indians might otherwise have assumed that the man was marrying the divorced or widowed woman out of pity.

baby-clothes-1406945-m.jpgChild custody and support are often common issues in California divorce proceedings, both for children born during the marriage, as well as those born prior to one or both spouses prior to their marriage.  In In re Marriage of Abbate, the Fourth District Court of Appeals explains the circumstances where a divorcing spouse may be required to pay support even if he or she isn’t the natural parent.

Ms. Camarata had a three-year old son when she married Mr. Abbate in 2005 and the parental rights of the biological father of the boy were terminated one year later. Abbate agreed to assume the role as the boy’s father, and the couple filed a petition for Abbate to become the child’s adoptive father the same year, but they divorced before the petition was approved.

In 2007, Camarata took her son to a hospital for treatment, asserting that that he’d been sexually molested. The boy was sent for therapy, which the court said continued until at least June 2010. Believing it was Abbate who had molested her son, Camarata left the marriage and filed a petition for divorce. She named Abbate as the child’s adoptive parent and asked for child support. A court granted a dissolution of the marriage in 2010, but denied the request for child support.

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The State of California operates under a community property regime in which assets and debts derived from the efforts or actions of either spouse during the course of a marriage are considered joint property to be divided equally between the spouses in the event of divorce. In In re Marriage of Rynda, the California Court of Appeals for the First District explains what happens to community property when one of the divorcing spouses also files for bankruptcy.

dollar-2-1003609-m.jpgCarolina and David were married in January 1996. The couple worked together as owners of a small insurance company until Carolina filed for divorce more than eight years later. A superior court dissolved the marriage in May 2005 and ordered that all community property – including the business – be divided equally among the former spouses. When Carolina filed for bankruptcy in 2009, however, the court ordered that all valuations of the couple’s assets for the purpose of dividing it between them be halted until the bankruptcy proceedings were completed. A bankruptcy court-appointed trustee later sold much of the property. That included Carolina’s stock in the company, which the trustee sold to David.

Back in the superior court, Carolina filed a motion claiming that she was entitled to a 50 percent ownership interest in the business and to be compensated for the community debts that were extinguished during the bankruptcy process. She also argued that there remained community property from the marriage for the superior court to divide. The court disagreed. “[T]he bankruptcy court has superior jurisdiction to the superior court,” the judge said. “And if the bankruptcy court divided your businesses or sold them, then they’re done with them. I can’t do anything about that.”

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So, sadly I was in court recently for what I hope will be my last litigation matter ever. Both clients and attorneys waited for nearly three hours because we were called last, a process that costs most clients a great deal of money for little to no effort on the part of the attorney except that I was helping my client at no cost. One more example of how divorce litigation costs can spiral out of control.

So we sat for three hours watching the other matters. One couple and their attorneys came before the judge and said they had reached an agreement on child custody and visitation where the eldest boy would live primarily with the Dad and the two younger kids would stay with the mum, but the parents lived in different towns about 2-3 hours apart.

The mom explained cogently and with heartfelt emotion why they felt this was in the best interest of the children and their family. The dad agreed. The judge, however, had other ideas and decided that she, someone who does not know this family from a hole in the ground, would supplant their thoughtful decisions with her own and rejected their agreement.

A person seeking to increase or decrease spousal support payments in California generally has to show that the circumstances have significantly changed since the support award was initially ordered. In a recent case, the state’s Third District Court of Appeals explained that a court can’t modify a support award if it doesn’t know how the first court originally determined the award amount.

indian-money-4-1400712-mHusband and Wife separated some time before 2008, the year in which they went to trial on various issues related to their divorce, one of them being spousal support. Husband filed documentation indicating that his monthly income was roughly $34,000 in salary, wages, and bonuses, that his monthly expenses were just under $9,500, and that he owned real property worth about $450,000. Wife, on the other hand, said she was making about $8,300 per month and had more than $8,400 per month in expenses. She also stated that she owned about $700,000 in real estate.

A trial judge dissolved the marriage and ordered Husband to pay Wife spousal support on a sliding scale through 2023. Husband was ordered to pay Wife $3,000 per month and 30 percent of his annual bonus in the first five years, $2,000 per month and 20 percent of his annual bonus over the next five years, and $1,000 per month and 10 percent over the last five years.

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Under California’s community property system, any property obtained by one or both spouses during the course of a marriage and up until they separate is generally split evenly upon divorce. As the state’s Second District Court of Appeals recently explained, the value of community property is usually based on the property’s value at the time of a divorce trial, not the time of separation. That is, of course, unless the spouses agree to another valuation date.

calendar-1072482-mHusband and Wife separated in January 2012, after roughly 37 years of marriage. Ten months later, Husband stated in an income and expenses disclosure that he planned to close his accounting and financial services practice. The business had generated $115,000 to $140,000 in net profits per year over each of the previous three years. In 2014, he began winding up the practice, advising clients that he was retiring and that they would need to find a new accountant for the upcoming tax season.

A trial court denied Wife’s request to value the business based on what it was worth at the time the couple separated, rather than at the time of trial. Wife had sought this ruling because it was likely that the business would be worth significantly less by the time trial rolled around, given that Husband was winding down the practice and his clients were going elsewhere. The court said Family Code Section 2552 required it to assess the business’ value as of the date of the trial unless Wife showed that there was “good cause” to use another value date “in order to accomplish an equal division of the community estate of the parties in an equitable manner.” Here, it said Husband’s plan to retire was legitimate and did not seem designed to devalue the business for purposes of the divorce proceedings.

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If you’ve previously read this blog, you may already know that we generally advise divorcing spouses to avoid the court system as much as possible and to strongly consider alternatives to traditional divorce litigation, including mediation and collaborative divorce. A recent case out of California’s Fourth District Court of Appeals is a good reminder of one of the major drawbacks of the traditional system:  the significant possibility for unreasonable delay and improper judgments.

courthouse-1330873-mIn this particular case, the spouses’ divorce was assigned to a court commissioner. Since the judiciary is flooded with work, the powers that be have devised a system in which non-judge commissioners act as “temporary judges” to hold hearings and render decisions in divorce and other matters. However, this particular commissioner was not qualified to render a decision.

Husband and Wife divorced in 2004 and entered into a marital settlement agreement in which the couple agreed to split child care and health care expenses for their children, and Husband pledged to pay child support on a sliding scale that eventually increased to more than $800 per month. In March 2011, the San Diego Department of Child Support Services levied money from Husband’s bank account for unpaid support and filed two motions against him:  one seeking to modify the payments and require Husband to look for a job and the other asking a court to determine the amount that he owed Wife in past due support payments.

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