SANTA ROSA FAMILY LAWYER BLOG

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Dividing Retirement Accounts.jpgHow does a couple going through a divorce go about dividing retirement accounts in a community property state? California is a “community property” state which has critical implications on how all property is divided in the event of a divorce. Essentially, in states with general legal rules like ours, all property acquired during a marriage or earned while the partners were married is deemed owned by both–it is “marital property.”

This idea seems simple enough for major assets–like house or a car–but what about more unique items, like retirement accounts? As a general rule, in most situations, vested retirement account benefits (those that are already earned) are considered community property and shared during divorce. It is important to understand that this is different than other forms of payments which are not split this way. For example, many government benefits, like worker’s compensation or social security, are not divided up between couples in a divorce.

Retirement Plans

Understanding how retirement accounts might be divided up and used following a divorce requires first appreciating the difference between different plans. Most notably, a retirement plan either has “defined benefits” or “defined contributions.” As the name implies, the defined benefit plan comes with a guaranteed monthly payment (benefit). This is different than a defined contribution plan which does not have a specific payout but is instead based on the contributions that you (the employee) and/or your employer put into the account. In general, defined contribution plans are becoming more and more common, because they come with less locked-in obligations in the long-term and are cheaper for most involved.

Defined Benefit Plans
By far the most common defied benefit plan is the traditional pension. With a pension, in most cases, at retirement age a beneficiary receives a set monthly payout. These may prove complicated in the midst of divorce, because there is not necessarily a set value sitting in some account to split. Yet, in most cases a value of the pension will be ascertained and split to the best of the court’s ability.

Defined Contribution Plans
A 401(k) plan is one of the more common defined contribution plans. Many local residents may have one of these. In most cases this plan is administered by an employer and involves agreement for a certain amount of contributions from both employer and employee each pay period. Federal rules limit contributions to $15,000 per year. In divorce the total amount in the 401(k) can be divided between spouses. However, it is critical to understand how early withdrawal, prior to retirement, results in a tax bill and potential penalties.

A 403(b) plan is like a 401(k) plan but its use is limited to certain entities. Only various governments, nonprofits, ministers, and others can take advantage of this option. Perhaps the most unique feature of these accounts is that there are limits on what investments can be made and even how many investment changes can be made. Rules allow one to contribute slightly more than in a 401(k) for these–up to $17,000 per year.

Finally, a defined contribution plan that most are probably familiar with is an Individual Retirement Account (IRA). IRAs are usually opened with a traditional financial institution, like a bank. Compared to 401(k)s and 403(b) plans there may be more flexibility in accessing these retirement accounts (with a penalty). Like the above plans, during divorce, an IRA account can be drained and split between spouses.

In many cases, retirement benefits are significant, and there is no other option but to take them out and split them. But, there are alternatives. For example, if one wanted to maintain an account intact, it might be possible by offering the other spouse alternative assets to offset the value of the retirement account. It it important to speak with an experienced divorce lawyer for help with these issues.

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Ripples of Water.jpgIn California, Family Court judges can order a child custody evaluation, which may also be referred to as a “730 Evaluation,” to look into the mental health and parenting practices of one or both parents. The evaluation usually takes place over a period set forth by the judge or the evaluator, from weeks to, sometimes, months. It will generally consist of psychological testing as well as interviews conducted with all adults involved with the child, including parents, step-parents and sometimes other adults who have significant roles in the child’s life. While the judge orders the evaluation, either parent may also make a request for an evaluation.

Child custody evaluations have become quite commonplace in California family courts. Child custody evaluations are most often ordered when the judge has concerns about the best interests of the child. Judges will often base custody and visitation orders on the findings in these evaluations. Typically, an evaluation could be ordered for a number of reasons, including:

· Concerns about child abuse
· Substance abuse
· Mental health problems
· One parent wishes to move out of state and the other parent objects
· Questionable parenting practices
· Inability to agree on a custodial agreement
· Questions or concerns about the child’s upbringing
Of course, there are other reasons you may wish to have an evaluation completed, and if that is the case, you can certainly request one.

In California, a custody evaluation must be conducted by a qualified mental health professional, like a psychiatrist, psychologist, qualified social worker, or marriage and family therapist. Even when a psychologist serves as the evaluator, they may choose to enlist another psychologist to complete the testing, with the evaluator then interpreting the test, since it is a highly-skilled area. The evaluator may either be chosen directly by the judge, or the judge may ask the parties to submit a list of evaluators, which the judge will then choose from.

After the evaluation, the evaluator will write up and submit a report to the judge and the parents’ attorneys. The evaluator may be called into court to testify, either to defend or explain the recommendations, and in some cases, can be ordered to conduct further study into the matter. The parties will receive the evaluator’s report in enough time to allow them to review it and make any objections.

If you disagree with the evaluator, you may challenge the evaluator’s report or even file a motion to have the evaluator removed. In a recent case a father successfully moved to have the evaluator removed. In that case, the evaluator acted in ways to suggest that he was biased against the father. Furthermore, the court found that, through this bias, the evaluator may have negatively influenced the child’s view of his father. Because the court then awarded sole legal custody to the mother based, at least in part, on the evaluator’s report and on the child’s possibly tainted statements, the court ordered the evaluator removed and the court’s custody determination reversed.

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