Possible Consequences When There’s a Delay Fulfilling the Terms of a California Marital Settlement Agreement — Marriage of Janes

In any divorce case, one of the primary issues willl likely be the division of property. While the couple’s marital home may be the largest asset, another important asset for many couples is retirement accounts. In the recent case of one Riverside County couple, their April 2010 divorce order gave the wife a portion of the husband’s 401(k) account. The case focused upon what should happen to the gains and losses from that portion of funds when that money wasn’t immediately segregated in the wife’s name. Issues like these highlight how almost any divorce case can contain many subtleties and complexities that can benefit from the detailed knowledge of a skilled California divorce attorney.

The case involved a husband and wife who separated in 2009 after 17 years of marriage. The couple’s divorce was finalized in the spring of 2010 and included a marital settlement agreement. Among other terms, the settlement agreement awarded to the wife the sum of $113,000 from the funds contained within a 401(k) retirement account.

Several years later, all of the money, including the wife’s $113,000, was still in the husband’s 401(k). The wife then went to court to ask that, in addition to the original $113,000, she receive whichever gains and losses had accumulated in the intervening time period. The husband opposed this request, arguing that the original order gave the wife no right to gains and losses, but only the exact lump sum stated. Giving gains to the wife would be an improper modification of the original order, he contended.

The wife countered that she should have received the funds in 2010, and, if the money had been segregated at that time, she would have gotten the gains or losses that accrued thereafter. The husband should not be entitled to benefit from the receipt of those gains solely due to the delayed movement of the money, according to the wife.

The trial court ruled in favor of the wife. The court decided that the $113,000 amount of funds became the wife’s separate property in April 2010, and this meant that she was entitled to any growth that amount of funds experienced in the time period following the date of the divorce judgment.

The appeals court upheld that ruling. The appeals court’s decision sided with the wife, and against the husband, by concluding that the trial court’s award of gains to the wife was merely an enforcement of the original 2010 order, rather than a modification of it. (Had it been a modification, that order might not have survived due to a potential lack of a valid basis triggering jurisdiction to make a modification.)

The fact that the original order did not mention gains and losses didn’t make the order awarding gains to the wife a modification instead of an enforcement order, though. There was no need to include a mention of gains and losses in the April 2010 order because the awarded funds became the wife’s separate property as of that date, and, as a result, any gains and losses that the funds experienced after that date necessarily belonged to the wife, even without their express mention in the order.

Any divorce case can be contentious, but in cases that revolve around the division of property, the spouses may be fighting to protect what they see as their financial interests. However, by engaging in protracted and expensive litigation, they may actually be harming their financial interests. Other ways of resolving these disputes may allow spouses to achieve positive and mutual results that are lasting…and considerably less expensive. With offices throughout the San Francisco Bay Area, divorce lawyer Lorna Jaynes provides innovative options, including mediation and collaborative divorce, for people seeking to resolve their dispute in a non-adversarial process that may save time, stress, and money.

To find out how we can assist you, contact our office online or call (510) 795-6304.

More blog posts:

What to do with the Family Home after a California Divorce? In re Marriage of Castellon, Bay Area Divorce Lawyer Blog, Nov. 23, 2016

Social Security and Retirement Benefits in California Divorce Cases – In re Marriage of Peterson, Bay Area Divorce Lawyer Blog, Feb. 15, 2016


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