Articles Posted in Ukiah

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Dividing the Pie.jpgDivision of debt in divorces is all part of a division of assets. Throughout a marriage, many couples acquire so many possessions, many of which have significant emotional value, and spouses wish to ensure that they retain the items dearest to them. Unfortunately, marital debt is also marital property and must be equitably divided during the divorce process. Particularly since the economic downturn in 2008, more and more divorcing spouses have to deal with extensive debt issues.

Divorcing spouses have two different options when dealing with debt during a divorce: pay off all of their debt prior to filing for divorce or dividing the debt. In most cases, divorcing spouses are not able to pay off all of their debt prior to divorcing, or they likely would have already paid it off. As a result, most divorcing spouses must determine the best and most appropriate way to divide the marital debt.

A divorce court will typically look at who incurred the debt and who benefited from the debt, to help determine who should be responsible for paying off the debt. For example, if one spouse purchases an expensive set of golf clubs with a credit card and uses those golf clubs every weekend to play golf, then it makes sense for that spouse to be responsible for paying that debt. As a general rule, only marital debt, acquired during the marriage rather than before the marriage began, will be divided by the court. Additionally, since California is a community property state, spouses are equally responsible for debt acquired during the marriage, no matter whose name the debt is in.

In almost every case, it is recommended that you request a credit report before you file for divorce or, at the very least, immediately after filing your divorce papers. The credit report can provide you with a great deal of information about your debts, including the status of your accounts, when they were opened, when they were closed (if applicable), and who is responsible for the debt. Your credit report could also remind you about old accounts that were never properly closed, which may be very important during the divorce proceedings if they are joint accounts.

Depending upon the circumstances, bankruptcy may need to be considered to deal with mounting debt issues. Depending upon the circumstances, one spouse may file on his or her own, or the couple may file jointly prior to finalizing the divorce. If most or all of the debt is in one spouse’s name, then it may be best for that spouse to individually file for bankruptcy. A couple may only file jointly for bankruptcy if they are still married, so once the divorce becomes finalized, a joint filing is not permitted. However, even if a couple is still married, a joint bankruptcy may not be possible due to conflicts of interests if they have already filed for divorce. It is important to remember that a bankruptcy will not discharge child support or spousal support obligations. In addition, Chapter 7 bankruptcies do not discharge any court-ordered obligations, but a Chapter 13 bankruptcy filing may still discharge such obligations.

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Heart Carabiner.jpgIn California, the property acquired or earned by either spouse during the marriage, is considered community property. California law mandates an equal split of community property (division of property). While many people are aware that items like houses, cars and other physical property must be divided during a divorce, they forget about life insurance. Life insurance can be a community asset, which is divided based upon the type of coverage.

Term Life Insurance

Term life insurance gives the policyholder coverage for a proscribed period of time, specified by the specific policy terms. Term life insurance tends to be the least expensive type of coverage available, since it will only cover the holder for a limited period. In addition, the premium only pays for the insurance policy. Once the term ends, the holder may renew the policy, but the premiums tend to increase with each renewal, as the policyholder ages.

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Calculator.jpgBusiness valuation in divorce cases and the distribution of marital property in many divorces can be complicated and the source of much frustration, anger, and contention for both parties. The process is even more complicated if the divorcing couple’s community property includes interest in a business. The business interest will often be the most valuable part of the divorcing couple’s community property. In addition, the business interest may generate profits and salaries for one or both of the divorcing spouses. The business interest is a part of the community property and, as such, must be divided as part of the divorce. In order to properly divide the community property, the business’s value must be determined.

The valuation of a business is not a simple tax, and the use of a professional business appraiser is almost always required. There are several methods to determine business value, and the appraiser will typically select the most appropriate valuation method according to the type of business in question and the information available. Valuation methods fall into three categories: asset approach, income approach and market approach.

Asset Approach

The asset approach determines the business’ value by using one or more methods based on the value of the assets minus any liabilities. The asset approach initially seems very simple, however, there are a number of complicating factors. For example, the value of property and equipment can, at times, be difficult to ascertain because their value is not always the equivalent of book value. In addition, assets like goodwill and intellectual property are notoriously difficult to value, because they are intangible. The asset approach is typically relied upon when the business is an investment or holding company, or with very small businesses or professional practices where there is little or no goodwill.

Income Approach
The income approach determines the value of the business using one or more methods that convert anticipated economic benefits into a present single amount. The income approach is the most widely used method for valuing small, privately held businesses. In reaching a business valuation, the expert will collect and review the business’ historical financial data, in an attempt to estimate future business earnings. The valuation expert will attempt to determine the future income, along with the risk that the projected income will actually be received.

Market Approach
The market approach determines the value of the business by comparing the business to similar businesses that have been sold. The market approach is very similar to the method used by real estate agents when valuing homes. The difficulty with the market approach lies in finding data about other comparable business sales in the same geographic area. In fact, most businesses being valued are small, privately held businesses, while most transactional information available relates to large publicly held companies, with significant differences in size, sales, profits and geographic location.

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Tunnel.jpgWhile the receipt of your final divorce decree from the court signals the end of your marriage, there is still some work to be done so that you can move on with your life. The following list is not exhaustive, but provides an excellent starting point.
Name Change
Women generally prefer to revert to their maiden name after the divorce is finalized. Filing for an official name change is not difficult, and your attorney will be able to assist you with the paperwork. Of course, once your name change is official, you’re still not finished. You will typically need to send or show a copy of your divorce decree to numerous agencies, offices, and companies in order to change your name in every aspect of your life. Remember, you will need to change your name for:

· Drivers license and car registration
· Professional licenses
· Social Security
· Internal Revenue Service
· Insurance companies
· Banks, credit cards, mortgage company, student loan provider, and auto loan company
· Library card
· Magazine and other subscriptions
· Associations and clubs
Estate Issues
Once the divorce is final, you will want to review your will and other estate documents in light of your life changes. Most likely your former spouse is listed as your primary beneficiary, and the divorce will not necessarily change that. An attorney can assist with the drafting of a new will, to ensure that your estate is properly taken care of and your property will pass to those you want. In addition, you will want to change any final directives and living wills as well, so that your former spouse is not making end of life decisions for you. Finally, review your life insurance policy to make sure that your former spouse is no longer your beneficiary, because a divorce will not affect the policy’s payout.
Financial Matters
Most married couples have a number of joint financial accounts. It is important to remember that you need to cancel your joint credit cards, and open new credit card accounts in your own name. In addition, you will need to first open a new bank account in your own name and, with your former spouse, close your joint bank accounts. Your divorce decree will most likely state how the bank accounts will be divided, so that should not be a concern at this time.
It is highly recommended that you obtain a credit report six months after the divorce becomes final. The credit report will allow you to make sure that you no longer have any joint accounts with your former spouse.
Insurance
If one spouse has been covering the other on medical insurance through employment, it will be necessary to obtain the paperwork for continuation of benefits through COBRA. The usage of COBRA will allow the non-covered spouse to obtain coverage through their own employer or to obtain individual insurance coverage, depending on their needs and financial situation.

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AlimonyAlimony, which may also be referred to as spousal support, is a monthly payment made by one spouse to the other following divorce. Alimony is used to prevent any unfair economic effects of a divorce on one spouse, such as a spouse’s impaired earning potential.
There are no definite formulas for determining the amount of spousal support that a former spouse can receive. Every divorcing couple is different and the amount of support a spouse can expect to receive is based on each couple’s individual circumstances. However, some common factors that are considered include:

· Income and property of each spouse
· Earning capacity of each spouse
· Impairments in earning capacity
· Whether there are any children and who will be raising the children
· Standard of living
· Duration of marriage
· Sacrifices or contributions one spouse made to the career or education of the other spouse
Spouses that have income and earning capacity that is comparable to the former spouse’s, they will receive less in alimony. However, if the lower earning spouse has custody of the children, if the marriage was particularly long or they contributed to their former spouse’s success, the amount of alimony may be adjusted accordingly.
Many people do not realize that there are different types of alimony. Rehabilitative alimony is made for a fixed period of time to allow the receiving spouse to get a job or finish their education. It acts as a transition for the receiving spouse. Many courts will periodically review rehabilitative alimony to determine if it should be continued, discontinued or adjusted.
Former spouses may also receive reimbursement alimony. Reimbursement alimony is awarded when one spouse reimburses the other spouse for expenses incurred during the marriage. For example, if a wife works to pay for her husband to attend college, the former husband may be ordered to pay his former wife reimbursement alimony for the costs of college. The reimbursement alimony payments will only continue until the amount is paid off.
Finally, where the marriage is long or one spouse is ill, the court may order one spouse to pay permanent alimony, which will continue until the death or remarriage of the receiving spouse.
While alimony is typically paid on a month by month basis, some courts have begun to allow the paying spouse to pay one lump-sum alimony payment. Lump-sum payments are really only appropriate where the amount of payment is fixed, like rehabilitative or reimbursement alimony. However, if the divorcing spouses wish, they can agree on a lump-sum alimony payment where permanent alimony is awarded. A lump-sum payment, where possible, can often be beneficial to both parties. The receiving spouse has the money immediately and does not have to deal with payment issues in the future. The paying spouse benefits by paying the amount outright, and not having to worry about making monthly alimony payments in the future. However, there are negatives with a lump-sum payment. Most lump-sum payments are less than what the receiving spouse would receive if they elected to receive monthly payments. In addition, with the receipt of such a large sum all at once, the receiving spouse may have negative tax consequences.

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Prenuptial Agreement.jpgPrenuptial agreements, or premarital agreements as they may also be called, are contracts entered into before a marriage to establish the property rights of each spouse in the event of a divorce. A prenuptial agreement is most common where one or both spouses are wealthy, but they can also be used to protect a family business or to serve other important functions. For example, prenuptial agreements can protect a party from assuming the debts of the other party, determine how property will be passed upon death, clarify financial rights and responsibilities during a marriage or avoid long, costly disputes during divorce proceedings.
Without a prenuptial agreement, California law determines how property is divided during marriage and after a marriage ends. Generally, a spouse is entitled to share and receive ownership of property acquired during the marriage, receive some of your property upon death, share in any debts acquired during the marriage, and share in the responsibilities in managing property acquired during the marriage.
The decision to enter into a prenuptial agreement is one that every couple should make individually, as every situation is unique. Many couples fear that discussing a prenuptial agreement, or the issues that the prenuptial agreement will cover, may cause problems in the relationship. However, often the opposite is true. One of the main reasons couples divorce is finances, and a prenuptial agreement will allow a couple to discuss those issues prior to marrying.
There are some downsides to a prenuptial agreement. Depending on your relationship, it may take some of the romance and excitement out of the wedding and its preparation. Sometimes, the beginning of a marriage is not the appropriate time to discuss prenuptial agreement issues because you and your future spouse may not know enough about your life together to answer the questions required. If that is the case, you can always wait until you are married, when you know more about how you and your spouse intend to manage your household and its finances before discussing what is referred to as a postnuptial agreement.
Like many contracts, a prenuptial agreement must be in writing and signed by both parties. In addition, if a spouse is pressured into signing the agreement, or if they were not provided enough time to read and consider the agreement, a court may find the agreement invalid.
Prenuptial agreements cannot address everything; courts will invalidate certain portions if they do not comply with current California law. A prenuptial agreement may not contain any decisions regarding child support or child custody, because the court has final say in determining proper child support and the child’s best interests. In addition, a spouse cannot waive his or her right to alimony, which is one of the most frequent provisions struck down by courts. The prenuptial agreement cannot include personal preferences, such as who does each chore, where holidays are spent, or what school the children will attend, because a prenuptial agreement is primarily intended to address financial issues, and judges do not like to interfere in private domestic matters.
In any case where future spouses are considering a prenuptial agreement, each person should acquire their own legal counsel, to ensure that the agreement is fair to both parties and to reduce the chances of any impropriety.

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Cohabitation in CaliforniaToday, many couples choose to live together, but do not wish to get married. Some do it for legal reasons, where they are still married and do not want a divorce, and some choose not to marry simply because they do not believe in the institution of marriage.

Most married couples do not realize that, by marrying, they entered into a legal contract. The contract defines the rights and obligations they owe to one another as a married couple. Unsurprisingly, unmarried couples can also enter into contracts to establish rights and obligations. While these contracts can be referred to by many names, they are most commonly called nonmarital agreements or cohabitation contracts.

In 1976, the California Supreme Court issued a decision establishing nonmarital agreements. The decision allowed unmarried couples to enter into written and oral contracts covering rights often associated with marriage, such as property rights. In addition, an unmarried couple may create a nonmarital agreement through their actions, without ever writing anything down or specifically speaking about it.

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Chess GameQ: What is an action for contempt against spouse and what is it used for?

You and your soon to be ex-spouse are going through a highly contested divorce proceeding. You believe that your spouse does not play by the rules, and your spouse believes that you are hiding assets. The unfortunate aspect of your divorce is that you have three young children, and there are child custody orders which grant both you and your spouse joint legal and joint physical custody of your children. In conjunction with those orders, you have a child visitation schedule with your three children on a week-on, week-off time-sharing schedule, with exchanges to take place every Sunday at 6:00pm.
It never fails that whenever there is a major sporting event on television, your spouse NEVER exchanges the children on time. In fact, your spouse is always hours late to the exchange, and you never can count on receiving the children on time. This last Sunday, October 28, 2012, the San Francisco Giants were playing the Detroit Tigers for the World Series. If the San Francisco Giants won the game, they would have been crowed the World Series Champion. Well, you knew, just as it always happens, that your spouse would not exchange the children on time. In fact, on this October 28, 2012, after the San Francisco Giant beat the Detroit Tigers to win the World Series, your spouse did not exchange the children but withheld them from you. As far as you were concerned, this was the last straw and you wanted to know how you could compel your spouse to abide to the rules set forth by your child custody court order.
The answer is simple. You have the right to file an action for contempt against your spouse. An action for contempt is a quasi-criminal matter. If found guilty, your spouse could actually be sent to jail or could instead receive a sentence requiring them to perform a significant amount of community service.
Actions for contempt are governed by California Code of Civil Procedure §1209 et al, which states that “(5) Disobedience of any lawful judgment, order, or process of the Court…” are contempts of the authority of the court. CCP §1209(5). Pursuant to CCP §1218(c), in any action where a party is found in contempt pursuant to the family code, “the court shall order the contemner to perform community service of up to 120 hours, or to be imprisoned up to 120 hours, for each count of contempt.” In addition, CCP §1218 prescribes a fine and/or punishment and provides that for each act of contempt the contemnor may be fined up to $1,000.00.

“The purpose of…civil contempt proceeding is not to punish but to secure future compliance with the orders of court…” Wilson v. Superior Court (1987) 194 Cal.App.3d 1259, 1275, citing Toussaint v. McCarthy (N.D.Cal 1984) 597 F.Supp. 1427, 1431.
In order for a party to be held in contempt of Court for disobedience of any lawful order, “the acts constituting the contempt must be clearly and specifically prohibited…” Brunton v. Superior Court (1942) 20 Cal.2d 202, 205. In fact, the “most basic premise in the law of contempt is that such punishment can only rest upon clear, intentional violation of a specific, narrowly drawn order.” Wilson v. Superior Court (1987) 194 Cal.App.3d 1259, 1273.

In your case, where your spouse has consistently disobeyed a Court order requiring exchanges of your children to take place each Sunday at 6:00pm, a Court may find that each instance of your spouse failing to return the children to you on time is a separate and distinct charge of contempt. Therefore, if your spouse has not returned the children on time on five different occasions, theoretically, your spouse could be held in contempt of five distinct charges. Under this scenario, your spouse could be sentenced to over 600 hours of community services, or fined up to $5,000.00.

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In parentage cases, also called paternity cases, the court issues orders that say who the child’s legal parents are. If you are targeted by a paternity suit, you may be wondering what your options are. If you are served with a Petition to Establish Parental Relationship by the other parent, you have 30 days to respond. It is very important to respond, because after 30 days, the court may grant the petition and legally find that you are the child’s father without a paternity test.

If paternity is established, you will expected to provide monetary child support until the child is emancipated. In California, emancipation occurs when the child is 18 and graduates high school, but could continue until the child is 19, if they are unmarried and attending high school full-time.

If parents are married when a child is born, there is usually no question of parentage. The law assumes that the husband is the father and the wife is the mother, so paternity is assumed. However, if there is a question as to paternity, the assumption can be overturned.

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Divorce, Annulment or Legal SeparationMarried couples who have chosen to part ways may wonder about their options. Most people are not aware of the differences between divorce, annulment, and legal separation.

Annulment

An annulment is when a court says your marriage is not legally valid. Annulments are rare, and can only be granted by a judge. Unlike a divorce, an annulment treats the marriage as if it never occurred. A marriage is always considered invalid if it is incestuous or bigamous (marriage to more than one person). Marriages may also be annulled if the marriage occurred due to force or fraud, if one of the spouses is too young to marry or already married, or if there is physical or mental incapacity. Similar to a divorce, the judge presiding over the annulment may determine issues of child custody, child support, alimony, and division of assets.

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