How to avoid unequal distribution of property during a California divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce lawyers; The Maggio Law FirmProbably one of the most contentious tasks for any couple to agree on would be the division and distribution of property and assets during a divorce. Making through the assets separation in mutual agreement without the need for additional intervention is certainly a welcome situation for both spouses.

If in case you’re unable to settle the issue of property distribution with your spouse, a California family law judge will have to do it for you.

To begin with property distribution in a divorce agreement across the United States is conducted via state law. Asset division follows either community property or equitable division state laws. California is a community property state.

How is property divided?

Marital assets can be distinguished into Separate and Community property.

Community property is everything co-owned by a married couple, or all property obtained and collected during the marriage, regardless of efforts and skill put in by either spouse.

Separate Property on the other hand covers everything owned by a spouse before marriage. Generally not divided during divorce agreements, separate property is retained by the owner spouse.

Separate Property

Here is a short list of assets that fall under separate property

  • Any inheritance or a gift awarded to a particular spouse, even if received during the marriage.
  • Property obtained before marriage, for instance, a savings bank account, etc.
  • Pension earnings proceeds received before marriage.
  • Businesses owned before the marriage.

Community Property

In the state of California property and assets accumulated during the marriage is separated equally between both spouses.

Community Property State Law doesn’t call for division of each object, but an estimated net value of jointly owned property is divided equally. For instance, a spouse can be given the family residence, while the other receives the business.

Basically the couple shares everything equally, the property and the debts. At times, families have to sell the house and share the proceeds earned, of if a spouse would like to continue living in the house, they would then need to buy the other half.

There are cases where separate property can get muddled in with community property in something called commingling. In this case it is difficult to tell the difference between what once was separate property from community property.

Getting divorced in California can be complicated!  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.

Signs That Your Spouse May Be Hiding Assets

Posted by: Gerald A. Maggio, Esq.

Divorce Lawyers Orange County; The Maggio Law FirmThe assets owned by you typically come under various heads such as a business, your primary residence or primary home, a professional practice, cash value of your life insurance coverage, pension funds, retirement funds, shares, savings, bank accounts and other property investments. Rather than depending on the integrity of your spouse or only relying on the fair conduct of the court, it is a sensible approach to watch out for these strategies and signs to know whether your spouse is trying to hide marital assets are not.

Check out the following key aims for your spouse to hide assets during a divorce:
1. To claim that expenses are greater than they are in reality
2. Highlight that their income is lower than it is
3. Exaggerate debts to show that they are insolvent

These are the most common tactics in a divorce:
1. Transfer asset ownership of marital assets to close friends or family members and ask them to hold until the divorce is finalized
2. Hiring a conspirator for manipulating the timing of invoicing creditors or income
3. Hiding unrecorded cash secretly
4. Extract recorded cash in the sly to apply complex accounting schemes

Check out some of these most common tricks used by spouses to hide assets:

Personal
1. Making advance claim for entitlement
2. Keep complaining about high debt or lack of money to stay away from later suspicions
3. Placing money on a casino account if the person is fond of frequent gambling
4. Announcing all of a sudden that their business has failed
5. Receive settlements and accounts at a private mailing as areas or postal box
6. Try to be secretive or tight-lipped about financial matters

Business
1. Delay in signing fresh contracts that could lead to increased income
2. Including friends or other family members on the payroll. Alternatively, pay them in lieu of their so-called consulting services that they are supposed to pay back at a later point of time
3. Pay more than what is actually due to pre-pay vendors or creditors that they refund once the divorce comes through
4. Purposely overlook reimbursing business-related expenses till the divorce is finalized

Assets
1. A spouse may sell marital assets to the friends or family members who pose as independent buyers. The profits, if any are shared once the divorce proceedings are over
2. Assets can be transferred to friends and family. Later on, once the divorce comes through, they are reversed
3. A sudden and overwhelming decline in the value of business or marital investments or assets can be declared by a spouse to minimize suspicion

Banking
1. Procure or maintain full control of the banking information, passwords and bank accounts
2. Open bank accounts in a friend or child’s name to conceal funds
3. Set up several business or personal fans accounts to transfer funds

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

How To Take Good Financial Decisions During A Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorney; The Maggio Law FirmAs a married couple you might have enjoyed a certain sense of financial security. Whether you were being supported by your spouse or you had two incomes coming in, it is always easier when you have someone to share the responsibility with. Going through a divorce could affect your financial situation in unexpected ways and if you are not prepared for them life could get very difficult.

Here are a few ways you can make good financial decisions to help you during a divorce:

  1. Mutual consent and shared lawyer fees: At the very start of your divorce you could find yourself shelling out a lot by way of legal fees. If you can talk to your spouse and you can both agree on a mutual consent divorce you could even hire one lawyer between both of you. A single lawyer who represents both your interests also means that you can split the cost between you two, or you should consider using a divorce mediator to work out the issues in your divorce.  Mutual consent could also avoid lengthy court proceedings which will reduce overall costs.
  1. Asset division: According to California law any property or other assets bought during marriage are considered community property and should be divided equally between partners. If you decide that you want to keep the house you might have to pay your ex for their share in the house which might not be economically feasible to you. You might want to look at the option of selling the house and dividing the amount equally between both of you.
  1. Child support: If children are involved you should consider your options for child support. If one parent has full custody an agreement should be worked out where the other parent provides financial support for the children. Even in cases of shared custody and co-parenting and arrangement can be made where the parent who earns more could help the other parent out financially.
  1. Get insurance: If you are receiving child support and alimony from your former spouse you are at possible risk of them not being able to pay you at any point. Your ex could lose their job or suffer and injury which might prevent them from working for a while making it difficult for them to pay you. You could have an agreement that requires your ex to be insured against such incidents so that they can continue with the payments.

There are many areas you might overlook while getting a divorce which could place a large financial burden on you in the long run. It might help to hire a professional to assess the situation and give you sound financial advice before you make any decisions.

Getting divorced in California can be complicated!  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

Status of Student Loan Debt After a California Divorce

Posted by: Gerald A. Maggio, Esq.

Best Orange County divorce lawyers; The Maggio Law FirmMarriages come with many responsibilities and one of them is supporting a spouse with his/her student loans. Paying back the educational loan can be tough for some and becomes even tougher once a divorce takes place. Current statistics show that college students who take up educational loans end up with huge debts which become hard to pay. In a marriage, the debt can be cleared by both spouse but it’s not as easy as it sounds. It can get complicated and after a divorce, students loans can look like a huge burden.

Finances are an important factor when it comes to a marriage and a divorce and most individuals are extremely cautious about how they spend their money. Debts are never pleasant and paying for something which is not yours can be even more painful.

How is the student loan divided before and after the marriage?

If you and your spouse have taken an equal amount of student loans, then each is responsible for their own debts. In such cases, divorce arrangements become easier to work out. However, if one of you has more debts than the other person, separate arrangements must be made to pay off the debt. Sit with your legal counsel and chalk out a plan to clear the debt. Student loans are often seen as property by a court of law and upon marriage and divorce, it is treated in the same way. So, if you had the student loan prior to the marriage, it becomes a separate property and should be cleared by you. However, if the loan was taken after you got married, then during a divorce, it can be treated as marital property. Then again, if the loan was taken by the person who does not have an income after marriage, the situation becomes trickier. If the other spouse took care of the student loan, then the court has the right to favor him/her during a divorce.

Loans are supposed to be paid by the person who took it but it does not always work out in a marriage. Having a student loan and having a job are not always related. Finances are an important part of divorce proceedings and no individual wants to pay more than he/she has to. Incurring student loan debts can be financially tough for the person it has been burdened with it. Student loan debt issues should be consulted with an experienced Orange County divorce lawyer.

Getting divorced in California can be complicated! Click the following link to download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.

How To Find Concealed Assets and Money During Your Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmAs soon as the divorce proceedings start, it has been observed that many people try their best to hold back what according to them is their own property or money. There are some individuals who even possess secret bank accounts as well as other financial activities when they were married. If you feel your estranged spouse may have done the same and you desire to get a fair settlement, you need to expose such hidden accounts

When you are not ignorant about the resources and techniques used by financial and accounts professionals, you will not become a victim of your former spouse or the spouse who is concealing certain assets. Here are some of the ways to determine if your spouse may have concealed assets.

Saving accounts of your former spouse can reveal unusual withdrawals or deposits made

Abnormal withdrawals and deposits may show light to unveil a hidden asset like investments made to generate dividends. When you come across such abnormal withdrawals or deposits, you should note them down. Make sure of retaining copies of all such account statements before separating from your spouse.

Check canceled checks and account statements of your spouse

When you come across a canceled check in order to make a purchase you were ignorant about like a real estate property, it can make a significant impact on how the marital assets are split in the event of a divorce. A lot of interesting facts may get revealed when you check canceled checks and account statements. You need to ensure that you have a copy of all such financial accounts in the discovery stage of your divorce.

A courthouse can be a precious source of information if you are checking your spouse’s hidden assets

In case your spouse has taken money on a loan from a mortgage institution or a bank, the loan applications made will be filed at the said courthouse, an individual has to fill up an application form for taking loan from a Frank. Such applications will have details of all the assets owned by that individual and the estimated values of each of them. Thus, most of the times, you get a fair idea of the actual assets owned by your spouse and their worth by checking a loan application form.

You can also begin the discovery process by checking your spouse’s tax returns

A majority of the people fill their income tax returns sincerely as they are afraid of paying fines and penalties or being imprisoned otherwise. Though a spouse could be hiding his or her actual income from you, they will not try to do it while filing their returns.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

You Should Know These Things About Prenuptial Agreements

Posted by: Gerald A. Maggio, Esq.

divorce lawyer Orange County; The Maggio Law FirmA legal contract that is agreed upon by two people prior to getting married is termed as a prenuptial agreement. In this agreement, the couple takes care of matters like the kind of property rights they will have in the event of their divorce, any property that they acquire during their marriage and the property, which each of them brings into their marriage.

There was a time when the prenuptial agreements were only for wealthy people. Today, things have changed. In case, both the spouses want to own a property jointly, one of them had given up his or her job to bring up the kids or have their own separate earnings, a prenuptial agreement is needed.

Couples can mention the kind of financial responsibilities each will have to fear on the event of their divorce. The agreement can also have in writing what are their e let actions from each other in the marriage and what should happen if their expectations are not fulfilled.

Here is a checklist of the things that should be covered in any prenuptial agreement. This list can help you to take a decision on whether you and your spouse should have such a contract or not.

Assets should be kept separated

The divorce laws of any state define and regulate what is a marital asset and what is not. The real issue is that you need to prove in the court, which were the assets acquired by you before the marriage and after the marriage collapsed. If you had created a prenuptial agreement, you will not need to prove the ownership of assets that were brought by you in the marriage. You just need to provide a list of such assets.

Inherited property

In case you have inherited any property, your spouse and you can agree in your prenuptial agreement that such property will belong to you in the event of a divorce.

Splitting debt

A prenuptial agreement can reduce your ownership when your spouse incurs debts during your marriage and while you get divorced. When you and your spouse agree on the way debts will be handled and the person who will be accountable for the debt in the prenuptial agreement, you can save your money and time when the breakup of your marriage tantamount to extensive litigation.

Divorce settlement negotiations

The most crucial point that a prenuptial agreement can constitute is who will receive what if there is a divorce. If you do not have such an agreement, the divorce laws if the state where you reside and the settlement negotiated by you will ascertain how your marital assets will be divided.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

Top 3 Costly Financial Mistakes to Avoid During Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorney; The Maggio Law FirmThere are many such cases where a divorcing spouse accepts a settlement even though it could be unfair to him or her. However, a few years down the line, he or she may go through severe financial constraints. Irrespective of what the reason for agreeing to such a settlement was, such an occurrence could be drastically improved even though it may not be avoided altogether. This is possible when you learn some of these most expensive financial blunders that are commonly made while arriving at divorce settlements.

Mistake 1: Unable to budget according to a new lifestyle

A common financial mistake that is made after the divorce is the inability to budget on the basis of one’s new lifestyle. This happens quite frequently, especially when one of the spouses retains the house for his or her emotional attachment or for the kids. The cost of house maintenance and the inadequacy of liquid assets at times lead to a fast disappearance of the cash and ultimately being forced to sell the house. However, a scenario like this can be avoided when you take a close look at your income and liquid assets versus your expenses.

Mistake 2: Unaware of the asset liquidity status

The capability of accessing an asset’s cash value is termed as liquidity. Typically in any divorce settlement, one of the parties is awarded the majority of the liquidity assets like brokerage accounts, retirement plans, and so on, while the other spouse gets a majority of the illiquid assets.

In case a proposed divorce settlement has less liquidity in your name, it means there will be adequate cash flow all through the years for coping up with your living costs. However, if that is not the case, you need to think about disposing of your house or other assets or bring down your expenses drastically so that your budgetary requirements can be met.

Mistake 3: Not exercising adequate control over the insurance policies

A majority of divorce decrees require one of the concerned parties to procure an insurance policy for insuring different types of financial needs such as child support or value of payments made towards alimony. In case you are that person for whom the coverage has been procured, it is vital that you should be either the beneficiary or the policy owner.

If that is not the case, your former spouse who held the policy can simply stop paying the premiums without your knowledge till the time there is a requirement of the insurance policy and it is nonexistent. It could be a financially shattering experience for you.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

Managing Student Loans During Divorce

Posted by: Gerald A. Maggio, Esq.

Best Orange County divorce lawyers; The Maggio Law FirmIn California, student loans can be considered to be community property, but it depends on the circumstances.

So who pays?

According to California Law, if the student loan was incurred after marriage, it can be considered community property and will be split between both the spouses regardless of whose name is on the loan. If the loan was incurred before marriage, then it is judged to be separate property and has to be paid off for the spouse who opted for it.

While this may seem simple, there are multiple circumstances that could change the provisions made above.  The length of the marriage is a key factor that affects the court’s decision. In a long term marriage, the person that took out the loan will likely have proof that both they and their spouse benefited from the education. The other party will have a hard time proving that they did not benefit and the court usually splits the loan payments.

If both spouses had student loans before marriage and ended up consolidating their loans, both parties are equally responsible for it. The court will not consider the individual loans and terms that were in place before consolidation. The date of consolidation will be regarded as the date of the loan and both parties will continue making payments.

California Family Code sections 2641(b)(1) and 2627 maintain that the community should be reimbursed for community contributions to education or training of a spouse that substantially enhances that person’s earning capacity. The amount reimbursed must include interest at the legal rate, accruing from the end of the calendar year in which the contributions were made.   However, if the parties agreed in writing that there would not be such reimbursement or the contributions were for regular living expenses, then there is no right of reimbursment.

Also, there is a rebuttable presumption under California law that the community has not substantially benefited from community contributions to the education or training made fewer than 10 years before the commencement of the divorce, while it is generally held that the community did substantially benefit from community contributions to the education or training made more than 10 years before the commencement of the divorce.

Couples that are worried about student loans are often advised to have a prenup before marriage. Many take the opportunity to outline their terms for loans and debts. If such a document exists, the Court will follow the same guidelines at the time of the divorce. If there is no prenup or the validity of the prenup is in question, the parties will have to negotiate debt division with each other. If this does not work, mediation might be the only solution before going to court.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

How Are Alimony Payments Affected by Bankruptcy?

Posted by: Gerald A. Maggio, Esq.

Divorce attorneys in Orange County; The Maggio Law FirmWhat is bankruptcy?

Bankruptcy can put a person in a huge financial predicament and occurs when that person has not been spending his money wisely and his expenditure has exceeded his income. Bankruptcy disallows the person from making necessary or important payments, paying off creditors, getting loans from banks and has a lot of other negative impacts on a person’s financial situation.

If a couple is undergoing a divorce and one spouse is required to make alimony payments to the other spouse and that spouse has filed for bankruptcy, then it can be very difficult for him or her to make the alimony payments. If the spouse is bankrupt, he can use this as a tool to avoid or escape making spousal support payments.

Dischargeable and nondischargeable debts

Bankruptcy disallows a person from discharging his debts. There are certain bills, payments, and expenses that are completely avoidable when a person files for bankruptcy and these are specified in the laws in the state of California. But some debts are nondischargeable which means they cannot be avoided or eliminated just because the person is bankrupt. These include tax payments, loans taken and alimony.

Even though alimony or spousal support and child support are some of the payments that fall under the nondischargeable debt category there are two situations in which alimony payments would be exempted from this category and the spouse would be discharged from making these payments.

U.S. State laws regarding alimony and bankruptcy 

Section 523 of the U.S. Bankruptcy Code clarifies that persons or debtors cannot be discharged from making spousal or child support payments because of bankruptcy. It states that alimony payments are nondischargeable debts under the laws of federal bankruptcy, however, there are two exceptions to this rule:

1.   Involvement of third parties 

If a third party becomes involved in the spousal support arrangements, then the alimony payments become dischargeable even though the spouse is declared bankrupt. If the spouse hands over the burden of alimony payments to a relative in his family, then he is discharged from making the alimony payments himself.

2.  Incorrect divorce documents

When a couple gets divorced the court awards them a divorce decree. This document is one of the most important documents in a divorce and specifies the reasons for the divorce and the terms and conditions of alimony/child support payments. If for any reason there are some mistakes or errors made in the divorce decree with regard to the nature and type of alimony required to be paid, then the spouse who is required to make the payments can be discharged of those debts if he is bankrupt.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

Handling Personal Debt During A Divorce

Posted by: Gerald A. Maggio, Esq.

orange county divorce attorneys; The Maggio Law FirmDuring a divorce, marital debts get divided just like marital assets. It is important to understand what your debts are and which ones are marital and which ones are personal. Usually, in places where your name or signature is present as the holder of that particular loan or mortgage will be your personal debt. And in places where you and your spouse are the joint owners, those loans or debts will fall under marital debts.

Work out which debts you need to clear first

To handle personal debts, the first thing that you need to know is which debts are important and need to cleared first. Make a priority list and put all your personal debts on that list. The top 2 or 3 debts should be cleared first before everything else. To prioritize the debts, realize which ones are high in amount and can cost you more financial damage than the others.

Create a plan for clearing out debts

Once you have created your list, create a plan to decide how and when you should clear the debts. Calculate how much money you own and compare it with how much money you have. You also need to keep some part of it as savings. Additionally, you can use budget planners to calculate what you can afford to repay.

Creating and following a course of action will help you reach your goals in the shortest amount of time possible. It will also help you save some amount of money every year.

Take legal action if you’re not supposed to pay the debt

Divorces can be complicated and if you’ve shared a strained relationship with your spouse during your marriage then get ready to pay more debts. But if you have even the slightest understanding of divorce proceedings, then you will know that your spouse does not have the right to make you pay for debts that you shouldn’t be paying. Hire an experienced divorce lawyer and take legal action if you must against your spouse.

Conclusion

Divorces can be complex if you don’t have much idea about finances and debt allocations after divorce. First understand which are your personal debts. Then prioritize them based on the amount you need to pay for each. Create a plan and start clearing it little by little. Additionally, hire a lawyer if you find yourself in legal difficulties or if your spouse puts false debt charges on you.

Getting divorced in California can be complicated.  Download our free eBook, 18 Important Things to Know About California Divorce to educate yourself on the process.  

 
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