Does it really cost $19 million to get divorced in Los Angeles? According to the March 6, 2010, Los Angeles Times, that is how much Frank and Jamie McCourt’s divorce could end up costing. As the Times points out, that is more than the Dodgers will spend on their starting infield this season. My initial reaction to reading that story on an overcast and rainy Saturday morning: You’ve got to be kidding me! No way! Get out! So how many of the destitute in Haiti could be saved with $19 million dollars? Of course, the same argument could be made about the cost of an average litigated divorce in Los Angeles, which is $50,000.00…if you are lucky. Frank and Jamie have hired multiple law firms and forensic accountants. We’re told that the ownership of the Dodgers is at stake because Frank McCourt contends that he has a post-nuptial agreement that makes him the sole owner of the Dodgers. Jamie McCourt contends the post-nuptial is no good, and that makes the Dodgers community property, which means she owns one-half of the team. It appears that the McCourt’s have the money to spend, all $19 million of it, and the lawyers and accountants will help them spend it, presumably wisely. The Times headline said, “Cost of owners’ split seems out of the ballpark.” That may be the understatement of the season. The McCourt’s apparently have the ability to spend $19 million to see who gets the Dodgers, but I doubt the average middle class couple can afford $50,000.00 or more to litigate their differences. My advice is simple: Try mediation or collaborative divorce first. If you and your spouse are successful, you’ll save enough money to fund your children’s college educations and still have money left over for Dodger tickets, a couple Dodger dogs and beers.
Articles: 2010 March
Call the Law Offices of Philip A. Wasserman (661) 294-8484
WHO GETS THE CHILD DEPENDENCY EXEMPTION?
Tax time is fast approaching. Divorced couples want to know who gets to claim their child or children as a dependent(s) on their tax returns. Unless there is a Court order stating otherwise, it’s the primary custodial parent who gets to claim a child as a dependent. The primary custodial parent is defined as the parent with whom the child spends the most time during the year. However, the custodial parent may allow the noncustodial parent to claim the dependency exception instead by signing IRS Form 8332. If both parents claim the child or children as dependent(s), the IRS will likely audit the tax returns to see who qualifies for the dependency exemption(s). If your ex-spouse wrongly took the dependency exemption and it resulted in an IRS audit that cost you money, you may be able to obtain reimbursement in the family court. If you allow your ex-spouse to take the dependency exemption, and they are also under a Court order to pay you child support, make sure the order says your ex-spouse may only take the dependency exemption if they are current on their child support and there are no arrears owing at the time of tax filing.
Divorce mediation makes “cents”—especially in tough economic times
There is nothing wrong about choosing to mediate your divorce because it costs less. In fact, that is a very sensible plan in tough economic times. Mediation generally costs two thirds less than courthouse litigation. In my experience, the number of mediation sessions usually range from five to eight, if each session is one hour in length. Here are just a few of the financial and emotional advantages to mediation:
- You don’t pay for travel time. Your attorney will likely bill you for some or all of his/her travel time to and from the courthouse.
- You don’t pay for waiting. Your attorney will likely bill you for the time waiting at the courthouse to have your case called and heard by the judge.
- You save on gasoline because you are not driving to a distant courthouse and you save on parking because it will either be free or your mediator should validate your parking.
- You control the date and time of your mediation sessions. You are not bound by the courthouse schedule. This is a very big advantage because you can often avoid taking time off from work and thereby not lose income or hurt your career.
- You can pretty much wear what you want. Most attorney will tell their clients to dress at least business casual when going to court and never to wear jeans. In mediation, you can wear shorts and flip flops. Nice in the Summer.
- There is no stress. Seriously. You are not going to be called as a witness. You are not going to be intimidated by a courthouse full of attorneys or the judge who sits on the bench wearing a black robe, because none of that is present in mediation.
- You can bring a drink (non alcoholic of course) and/or a snack to mediation. You cannot eat or drink in the courtroom.
- You can leave your cell phone on in mediation. Judges can and will confiscate a cell phone that rings in their courtroom.
The list of advantages to mediation can go on and on, but by now you get the point.
Attorney-Client Relationships: Built on Trust
Why did the client cross the road? Because his attorney told him not to. Of course, this joke underscores that the attorney-client relationship must be built on trust. Here are some tips on how to interact with your divorce lawyer that should save you time, money and help you avoid frustration and misunderstandings.
First, you must be candid with your lawyer. One of the biggest problems attorneys face are clients who don’t disclose damaging information early in their case. I recall one former client who, only ten minutes before a custody hearing, revealed to me that he had a six-month-old arrest and conviction for drug use. You can bet the other side already knew about it. Your attorney can help with damage control if you tell him or her the “bad” news from the start, or whenever it happens. It usually turns out that something a client thinks is very bad isn’t, or can be mitigated.
Second, be honest about your assets and debts. The last thing you want to do is to try to hide money or property from your spouse. Remember that you, and not your attorney, signs the financial declarations under penalty of perjury.
Third, your divorce lawyer is your advocate, not your therapist or financial guru. There is no substitute for a good therapist to help you through the emotional ups and downs of divorce, and a good financial planner.
Fourth, tell your divorce attorney what’s most important to you. It may be more time with the children, the house, or a favorite antique. Your attorney is not a mind reader. You and your attorney are a “team.” It’s OK to ask your attorney what you can do to keep costs down and help expedite your case through the system. Be proactive and involved.
Finally, don’t get hung up on the “pots and pans.” Remember that all your furniture, furnishings and appliances are valued at the money you could get them at the local swap meet or garage sale. Unless you have art or antiques that can be appraised, there’s no use spending new money in attorney fees and court costs to get old furniture and appliances. Today, these items are commodities and unless you purchased furniture as art, it doesn’t make sense spending thousands of dollars to fight over that old sofa.
DIVIDING COMMUNITY PROPERTY THE HARD WAY
The Associated Press reported on October 10, 2008 that a couple in rural Cambodia terminated their 18 year marriage with a divorce settlement that entailed sawing in two the wooden house they once shared. The husband took away with him all the bits and pieces of his half of the house. I’ve never heard of a divorcing couple in California going to that extreme, but even when you don’t take a saw to the house, dividing community property can be more complicated than dividing by two. California is a community property State and that means all property acquired during marriage is presumed to be community property. Property acquired outside of the State of California during marriage is called quasi-community property, but is treated the same way. However, there are exceptions to this rule and they can be quite complex, which requires an experienced family law attorney to recognize these issues. One exception is that property acquired by gift or inheritance is normally a spouse’s separate property, but the character of that property can change, depending on the actions of the spouse after receiving the gift or inheritance. For example, if one spouse uses his/her community efforts by day trading his/her inheritance to stock market riches, the community may gain an interest in the rising stock portfolio. But if the spouse is an investor and only trades on occasion, the community may gain no interest in a rising stock portfolio, and the entire inheritance will likely remain that spouse’s separate property. Getting back to that Cambodian couple, apparently the wife got the better part of the deal because she got to keep the land the house was built on.
Failure to Disclose Lottery Winnings is a Lesson for All Divorcing Couples
If you’re getting divorced don’t forget in re Marriage of Rossi (2001) 90 Cal.App.4th 108. Rossi is one of the most important cases in all of California divorce law. Why? Because of the penalty imposed on Ms. Rossi for failing to disclose her 1.3 million dollar lottery jackpot. The case was big news a few years ago, but people have short memories, so a reminder is due.
Ms. Rossi never told her husband about her lottery winnings while they were married. The parties’ divorce judgment said they had made a full disclosure of all gifts and property. It also provided that a party who failed to disclose an asset that was later discovered would pay its full market value to the other party. This is common divorce judgment language. Ms. Rossi never mentioned the lottery winnings and she arranged to have the money mailed to her mother’s house.
But, the postman always rings twice and Mr. Rossi found out about his ex-wife’s lottery winnings when he got a letter in the mail offering to buy out lottery winnings. He moved to set aside the divorce judgment on grounds of fraud, breach of fiduciary duty, and failure to disclose. He asked the trial court to award him 100 percent of the lottery money plus attorneys’ fees. The trial court ruled that Ms. Rossi had intentionally breached her fiduciary duty to Mr. Rossi by concealing the winnings from him. It awarded Mr. Rossi 100 percent of the winnings. Ms. Rossi appealed, but lost.
The lesson of this story should be obvious: Parties in a California divorce have a duty to disclose all of their assets, debts, liabilities and income, whether they believe them to be community or separate property. This is the law, no ifs, ands, or buts. You must list this information on your Preliminary and Final Declarations of Disclosure. And it doesn’t hurt to have a private investigator run a propety check on your spouse sometime after the divorce is over. Mr. Rossi learned of his wife’s lottery winnings by chance through the mail. Who knows, you may have won the lottery and not even know it.
Highlights on Family Law
Attorneys are required to complete Continuing Legal Education courses each year. Here are some highlights from the course that I recently attended on family law:
“Flexibility” has become the new buzzword in family law with respect to custody of minor children. Gone, it appears are the days of the primary custodial parent (historically the mother) telling the father that he can only see the kids on the days listed in their court order. As one family law expert stated, “We are entering the era of ’21st century parenting.’ ”
The new case of In re Marriage of Melville (2004) 122 Cal.App 4th 601, sets forth the current thinking of the Court of Appeal, that trial judges in the family courts are supposed to follow. The justices in the Melville case said that the primary custodial parent should not only follow the court order regarding visitation, but must also be flexible. The lesson here: Don’t deny your ex-spouse some extra time with the kids if you receive reasonable advance notice of the request. Of course, there may be exceptions, – such as cases involving domestic violence, substance abuse and cases that require monitored and supervised visitation for one party. If you’re not in one of those categories, you may want to consider being flexible when it comes to sharing the kids. If you can’t agree with your ex-spouse, the court order controls until modified.
Grandparent visitation rights survive in California. The California Supreme Court says that Family Code section 3104, which provides grandparents with visitation rights in divorce cases, is constitutional and is not overturned by the U.S. Supreme Court’s decision of a few years ago in the Troxel case. Still, grandparents have an uphill battle for visitation with their grandchildren.
Spousal support may include money for savings. In Marriage of Wittgrove (2004) 120 Cal.App. 4th 1317, the Court of Appeal said it was okay for a trial court to use a history of savings as part of the status quo when determining spousal support. In that case, father argued that mother’s spousal support needs didn’t include savings. Both the trial court and the Court of Appeal disagreed.
Keeping Hold of the Big Ticket
The house is usually the “big ticket” item in a divorce. In many cases, women often trade their community property interest in their husband’s pensions or 401(k) plans for the house. But, holding onto the house may not be the best choice. First, you must consider whether you can afford to keep the house. Even if you are receiving child support and spousal support, you must consider what would happen if your ex-husband got laid off or sick and your support ended or was significantly reduced. Could you afford the house under those circumstances? Second, consider the cost of upkeep, such things as insurance, repairs, property taxes, and so on. Before considering whether you are going to trade your interest in a pension for the house, take stock of all the expenses each month. Will you have enough income to cover all expenses and more importantly, will you be able to save money for emergencies?
A better strategy may be to sell the house, divide the money and purchase a less expensive residence. That way you still keep your community property interest in your ex-spouse’s pension, which means that you’ll have that income for retirement. Additionally, you can start your own IRA after the divorce. I generally caution my women clients not to trade their interest in their husband’s pension, especially government pensions, for the house. Government pensions are generous, backed by the government, and often come with cost of living increases. Before trading the pension for the house, you must consider not just where you are financially today, but where you will be at the age of retirement and beyond.
One of the biggest mistakes women make in divorce is not having a clear picture of their finances. If your husband has been the one handling all the money, it is time to get financially educated. Your divorce attorney is not a financial advisor, but should be able to point you in the right direction and suggest resources to help you become financially educated. Make sure you have a clear picture of your finances before giving up your interest in that pension or 401(k) for the house.
Marriage of Brown and Yana
The recent California Supreme Court decision in Marriage of Brown and Yana reminds me of the old joke that goes like this: “Where does the 800-pound gorilla sit?” The answer is, “Anywhere it wants to.”
Marriage of Brown and Yana involved a divorced mom’s plan to move from San Luis Obispo County to Las Vegas, Nevada with their 12-year-old son Cameron and mom’s children with her new husband. Dad opposed the move and the inevitable move-away battle began in the trial court. The trial court appointed an attorney for Cameron, who reported that Cameron was “a conflicted young man” who said “different things at different times, based upon who he happened to be with at the time.”
At the end of the day, mom got to move with Cameron and her new husband to Las Vegas. As the case wound its way through the legal system, and all the way up to the California Supreme Court, little Cameron became a not so little teenager. Cameron apparently decided he preferred to leave Las Vegas to live back in San Luis Obispo County, so he moved back and began living with his dad. The 800-pound gorilla made his choice.
Does this mean that 12-year-old children have the final say regarding which divorced parent they want to live with? As far as the law is concerned, the answer is probably no. Remember, however, that Cameron became a teenager while this case went from the trial court to the California Supreme Court, and that changed everything from a practical standpoint.
California Family Code Section 3042 provides that courts shall consider the preference of a child in making custody orders if that child is of sufficient age and capacity to reason so as to form an intelligent preference as to custody. The practical implication of this Code Section is that teenage children become the 800-pound gorillas in divorce and post-dovorce cases. Something to think about before spending the time, money and emotional capital fighting over custody of your teenage children. An alternative for families in confilict with teenage children is family counseling.
Non Custodial Parents Should Embrace Texting – Text Your Teen.
Teenagers love to text. Want proof? The Census Bureau reports that Americans sent 110 Billion text messages in December 2008. In the same month in 2007, they sent 48 Billion texts. Many of those texts were sent by teenagers. Teens like to text because it’s efficient and private, according to Amanda Lenhart, who is a senior research specialist for the Pew Internet and American Life Project. She was quoted by the Los Angeles Times. Ms. Lenhard says that text messaging seems to cut through some of the extraneous conversation that teens don’t want to have. Remember that last time your teenager had a long telephone conversation with you? See what I mean?
Non custodial parents should embrace texting because it can keep them in touch with their child/children. Sometimes just letting them know you are thinking about them is enough. You can text from your phone, but there is also a service called 3Jam.com that allows you to send and receive text messages from your computer. A friend of mine uses this service to have a text message waiting for his daughter every morning.
Of course, texting is not a replacement for a personal relationship with your child, and it should not be overused. Teenagers have notoriously short attention spans and hate to be embarrassed by their parents in social settings. However, texting can be a valuable method of staying in touch during those times when your child is not in your custody. Even better, send your child an old fashioned letter or card even if you live in the same community—just because.
