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.  

Cash-less in California: Family law, Divorce and Bankruptcy

Posted by: Gerald A. Maggio, Esq.

divorce lawyers in Orange County; The Maggio LawDivorce can sometimes lead to bankruptcy and make divorce an even harder process. Filing for a bankruptcy can be a tedious task if you do it on your own. Getting a bankruptcy attorney is probably a good idea. During divorce, one of you may not have the means of paying the debts. In such cases, bankruptcy can be used in one’s advantage. Bankruptcy is a means by which you can lower your debts and save yourself from spending more than you want to during a divorce. Additionally, filing for bankruptcy is a good idea if you and your partner don’t want debts after your divorce. In California, bankruptcy is dealt seriously.

Divorce and Bankruptcy in California

In California, you and your partner are equally responsible for every debt accumulated during your marriage. The state is not concerned with who accumulated the debt and to what extent. Being a community property state, this law is strictly followed.

Divorce agreements don’t affect creditors and they expect the debts are jointly owned by both you and your spouse. If one of you fails to pay the debts or abscond from payment, creditors can come after your partner. During your marriage if both of you jointly acquired credit card debts but the court orders only one of you to pay, creditors may still hold your other partner liable.

If you jointly file for bankruptcy before you get divorced, many of the debts can be waived. You and your partner are saved from future debt obligations and the burden is also lessened. Also, the remaining debts decrease.

During divorce proceedings, bankruptcy can be a roadblock. It could become a major reason for fights between you and your partner. So, if you file for bankruptcy before your divorce, it eases the process and avoids problems between the both of you.

Bankruptcy and Divorce costs

If you file for bankruptcy along with your spouse before your divorce, the costs are less. This is because the fees are the same for both individual and joint filings. If you hire a bankruptcy attorney, your fees will be lower.

While hiring a bankruptcy attorney individually, you should be careful because one attorney cannot represent the both of you. And in such cases the fees will also increase.  Bankruptcy and divorce costs differ from state to state and from couple to couple.

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.  

Dividing A Business or Professional Practice In Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce lawyers; The Maggio Law FirmSimilar to the other assets and property, the business and professional practice is also subject to division between the two parties involved in a divorce. The first consideration to be made in the deciding upon the division of a closely held business or professional practice is to determine whether it falls under the category of separate or community property.

Determination of a business or a professional practice as separate or community property 

The basic guidelines of establishing a business or professional practice as a marital asset are similar to those employed for other property and estate. A business or professional practice which was owned and operated by either spouse before he or she got married will be considered as separate property. However, if the spouse continued to operate the business or professional practice even after their marriage, the property will be considered as community and subject to adequate division in the event of a divorce. In addition to this, even if the business or professional practice is established as separate, the increase in its net worth will be considered as community property. 

Evaluation of the value of a business or professional practice 

There are several factors which are considered while assessing the value of a particular business or practice for the purpose of division in the event of a divorce. A professional appraiser will take into account the individual values of the real estate, inventory, finished goods, amount receivables, bank balances and even the goodwill of the said business to determine its net worth. Similarly, the value of a professional practice such as legal, medical, architectural or accounting will also be calculated on the basis of the individual worth of its physical property, account receivable, fees and goodwill. The most difficult aspect of assessment is the evaluation of the goodwill of a business or practice, since it is largely intangible and cannot be determined via simple figures and statistics. 

Distribution of the business or professional practice 

The final and most complex step in the process is the actual division and distribution of the business or professional practice between the divorce partners. In a majority of divorce cases, the owner of the business or practice is expected to compensate for the ex spouse’s interest in the property by ‘buying out’ of other partner’s interest as part of the division of 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.  

The Disposition of Student Loan Debt in a Divorce

Posted by: Gerald A. Maggio, Esq.

orange county divorce attorneys; The Maggio Law FirmA student loan, nowadays, can be quite significant. It may very well run into six figures. A number of professional couples carry student loan debts from their college years. Now, in a divorce, just like the assets are divided, the debts have to be divided as well. The question is whether student loan debts are considered as marital debts or separate debts.

For what purpose the student loan was used for

If the student loan was used solely for the purpose of pursuing the degree of one spouse, then it may be considered as a separate debt. For example, the money was used only for paying the tuition fee, to buy study materials, for projects, and so on. However, if the money was used for living expenses as well, apart for education purposes, then the debt may be considered as marital debt. Since the money benefited both the parties, both of them have the responsibility to pay it back together. In California, the enhanced earning ability of a spouse as a result of acquiring a degree remains with that person itself. That is, the income earned by that spouse belongs to him/her, the other party does not have any right to that income.

The earning ability of each spouse

The court will look at the earning capacity of the parties involved while deciding on the student loan debt. If one spouse has literally no income or his/her income is very low or the earning potential of that spouse is very low, then the court may ask the other spouse to take care of the student loan debt. While this may not seem fair to the spouse burdened with paying off the student loan debt, especially if the money was also used for household expenses, the court sees it only as fair since the other party has no income or only limited income.

The tax benefits

The tax benefits may make it desirable for one party to assume the whole student loan debt if the other part agrees to take care of another debt, maybe the credit card debt. This is more or less a negotiation. If both the parties find it working to their benefits, then it is something that they will no longer have to argue about or ask the court to decide.

The intended purpose of a student loan is to use it for educational purposes. If it is used only for educational purposes, then a lot of complications can be avoided during debt division.

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.  

Preliminary Financial Disclosures Are Necessary In A Divorce

Posted by: Gerald A. Maggio, Esq.

divorce lawyers in Orange County; The Maggio LawPreliminary financial disclosures have a crucial part in a divorce. Documents detailing the debts and assets of the parties (separately and jointly held) in a divorce need to be prepared. Omission of any debts or assets, intentionally or unintentionally, can affect the outcome of the divorce. California divorce laws require both parties in a divorce to prepare preliminary financial disclosures or else a divorce will not be granted.

The Schedule of Assets and Debts (FL-142) and Income & Expense Declaration (FL-150) make up the preliminary financial disclosures that have to be submitted by divorcing couples in California. All separate assets and debts, property and income from community property are declared in these two documents. The state of California considers all debts, assets, liabilities, pensions and property acquired during the period of marriage as ‘community property’.

Importance of disclosures

The disclosures help the court and the divorcing couples to determine the extent of their community property. For most people, determining community property becomes a tedious task. The state of California allows you to represent yourself in your divorce case. So if you are not aware of what qualifies as community property you stand to lose the case. Similarly, intentionally incorrect disclosures can severely affect a divorce ruling. Either or both parties may get affected.

Result of incorrect disclosures

If a party innocently makes mistakes while filling out their disclosures because they are not aware of what constitutes community property, they stand to lose out on their share of the community property. For example, the husband receives returns on an investment made in his name and the wife inherits a piece of jewelry from her grandmother.

Any person would think that because the investment is in the name of the husband, it is his separate property; and the inherited jewelry is community property because it is not in the wife’s name. But legally speaking, that is incorrect. The inherited jewelry is in fact the wife’s separate property and the returns on investment are a community property. So the woman would have lost out on 50% of the returns on investment.

Intentionally preparing inaccurate disclosures can lead to punishment for the guilty party. If one party makes certain deposits and enjoys benefits from it but the other party is clueless about this income, the situation will be termed as willful withholding of information. The party concealing this information can be punished by the 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.  

 
No Legal Advice Intended: This website includes information about legal issues and legal developments. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and should not be taken, as legal advice on any particular set of facts or circumstances. You should contact an attorney for advice on specific legal problems. Full disclaimer.