Articles Posted in Spousal Support

There is more than one way to split a pie. For couples considering a divorce in California, for example, a variety of issues can determine how the pie (money, property, etc.) is divided between spouses. In In re Marriage of Baron, California’s Second District Court of Appeals takes a look at some of those issues, including a spouse’s ability to work.Richard and Sandra Baron were married for nearly 30 years before divorcing in 2007. Shortly after they were married, the couple started a retail and commercial nursery in which Richard’s brother also owned a 40 percent stake. Sandra worked for the company over three decades – as an office manager and in other clerical positions – until she was fired in 2010.

In a stipulated agreement, the Barons decided that Richard would buy out Sandra’s interest in the business, paying her $1 million (plus interest) over the course of 15 years. Following a trial, a lower court also ordered him to pay spousal support in the amount of $5,500 per month until either person died or Sandra remarried. The court additionally required Richard to buy a $500,000 term life insurance policy as security for spousal support.

In reaching this decision, the trial court noted that Sandra was 62 years old and had recently been fired from the only job she’d ever had. “The court finds it is unrealistic to believe that [she] will find employment in the near future,” the trial judge wrote.

The Second District upheld the order on appeal, rejecting Richard’s argument that he couldn’t afford to pay support because of the money he owed Sandra for her share of the business. The court explained that these were two separate issues. “Richard’s analysis is based on the incorrect assumption that his property division obligation affects his ability to pay spousal support,” the court said. Citing its 1991 decision in In re Marriage of Martin, the court further explained that “a spouse may not finance a ‘buy-out’ of community property and then successfully claim inability to pay spousal support.”

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Spousal support is an important issue in many California divorce proceedings. As California’s First District Court of Appeals’ recent ruling in In re Marriage of Cesana shows, the issue can become tricky when one or both former spouses’ situations change over the years.

Nelly and Amedeo Cesana were married for 24 years before divorcing in 1985. Under the terms of a settlement agreement between the former husband and wife, Amedeo agreed to pay monthly spousal support to Nelly at a rate of 30 percent of Amedeo’s income, capped at a maximum $9,000 per month. As the court explained, “Amedeo’s financial circumstances varied greatly” in the years following the couple’s divorce. As a result, the two agreed verbally that Amedeo would support Nelly to the best of his ability. He made varying payments until 2008.

Later, Amedeo experienced financial difficulty when the company that he founded went bankrupt shortly after the divorce. He subsequently started a second company with his new wife, Rhonda, and employed Nelly as an administrative assistant from 2004 to 2007. He did not pay marital support during this time, but began paying Nelly $1,500 a month after her employment with the company was terminated.

Amedeo (60 percent) and Rhonda (40 percent) owned the company jointly until 2007 when he transferred his ownership interest in the company to his wife, making Rhonda sole owner. A lawyer for Nelly contacted Amedeo by letter in January 2008, claiming that he owed Nelly a significant sum of money for missed spousal support payments over the years. Amedeo disputed the claim and shortly thereafter retired from the company, reducing his salary to $60,000 from $180,000. Rhonda, meanwhile, continued to work for the company at an annual salary of $140,000.

In the lawsuit that followed, a trial court ordered Amedeo to pay $1,500 per month in spousal support, as well as $15,000 for Nelly’s attorney fees, but denied Nelly’s request that he also be required to pay support arrears. In determining the monthly support sum, the court combined Amedeo and Rhonda’s current salaries ($200,000) and divided the figure in half to calculate what it called Amedeo’s annual income. The court explained that much of Rhonda’s income was owed to Amedeo’s efforts in starting and running the company. “[W]hile Rhonda has a significant management role in the company, and certainly performs more than just a clerical or administrative function,… it is inequitable and unreasonable to divide the collective income received by Amedeo and his wife in anything other than an equal manner,” the trial court explained.

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