What Happens To The Company You Run With Your Spouse After Divorce?

Posted by: Gerald A. Maggio, Esq.

Orange County Divorce Attorneys; The Maggio Law FirmMany married people did not even think in their wildest dreams that would get divorced one day. This is especially true when the spouses work with one another. Irrespective of what decision you arrive at, these are some of the important things you need to sort out in your business while your divorce is underway.

You need to be clear about creating divisions between emotional, financial and legal issues

Any divorce is not just a legal split between married couples. When both of you are working together, you should be serious about sorting out ways of dealing with your business, any kids you may have from your marriage and finances in the best possible manner. More importantly, you should make it a point, to begin with segregating these issues, desirable outcomes and needs.

When you are on the verge of coming out of your romantic relationship, there is a tendency seen to let personal concerns complicate the business relationships. So take some time to establish what your specific requirements and desirable outcomes are in different areas with distinct and concrete plans and goals.

Do not be on the journey all alone

Though you may be somewhat prepared now to receive financial and legal aid, remember that it will be a great morale booster when you have some people by your side to support you emotionally. Some experts even recommend counseling. In case you and your former spouse continue to work together but raking up emotional issues from the past in your work, it can be quite tough to manage a business effectively. It is recommended that you form a team comprising of professionals, family, and friends who can help you to get over your emotional and psychological dilemmas.

Take a break from your work

Irrespective of how amicably you parted from your spouse after the divorce. There is bound to be a transition period. So, take some time off from whatever you had been doing previously and try to introspect what you actually want, rather than acting on an impulse and trying to stick together stubbornly or breaking up your business. After all, time does heal everything.

Your roles need to be defined

Not only does your relationship need refining after the divorce, but you should also embark upon drawing clear boundaries around your various responsibilities and roles at work. Proper identification of the task each person will be doing needs to be properly defined. This will facilitate in ensuring that you do not give to micromanage one another.

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

What To Know About Business Valuations In California Divorces

Posted by: Gerald A. Maggio, Esq.

orange county divorce lawyers; The Maggio Law FirmProfessional business valuations is an expensive task in any marital dissolution. The spouse who manages the business quickly realizes that techniques used to value the practice have no relation with the practice’s fair market value. The spouse can then in all fairness insist that no willing buyer can be found. There can also be concerns regarding “double dipping”. This comes as the same earnings used to calculate a value in such a practice can also be utilized for calculating the support. In case the practice has a value of marital efforts, it must also be divided.

In California, a number of cases have reviewed techniques utilized by experts when valuing any professional practice. One consistent factor common between all decisions is the court will honor any technique for valuing such a practice. This includes goodwill. These will remain true as long as value is legitimately established by the evidence.

General principles

A trial court, when determining the value of any professional practice, must find out existence and the value of a number of factors. These include fixed assets like furniture, law library, cash, supplies and equipment and a number of other assets like accounts receivable, costs advanced with collectability chances, work in progress that are partially completed, but not receivable billed, and also work which is completed, but not yet billed. The practitioner’s goodwill in his business as going concern and the practitioner’s liability related to the business.

Other general principles include the business nature and enterprise history from the time of its inception. It also includes the general economic outlook and also the outlook and condition of the particular industry concerned. The stock’s book value and the business’s financial condition also plays a  role. The company’s earning and dividend paying capacity are also important.

Value standard

Unlike when assets are to be divided in kind, Californian courts can be obligated to rule on assets values and then divide them equally. Considerable debate has been allowed to find the proper standard to use in valuing marital assets. This is more fueled by the imprecise use of court terms like “going concern value” or “investment value”. The worst term is “value”.

Treasury regulations in the United States define fair market value as price in which property will communicate between a buyer and a seller. They both should not be under any compulsion to sell or to buy. Both must also have relevant knowledge about the facts.

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

Can You Mediate Custody Of Your Pet?

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmDivorce mediation is typically the process of amicably reaching a settlement to end your marriage, but you are unsure what to do about your furry friend. Under California law, pets are typically classified as personal property and there are no explicit pet custody laws like there are laws for children. If one party gets exclusive care to the pet, the other party may not be permitted to visit the pet. Pets used to classified under the same category as other pieces of personal property, but the laws have changed for the better recently.

Ownership rather than custody

There exists no provisions for pet custody in California unless the divorcing couple come to an agreement. A pet will be looked as a non-dividable piece of property. The party who does not receive exclusive care to the pet may not have any legal recourse. The best thing to do in such cases is to develop a pre-nup before marriage stating how pets would be divided.

What if I bought the pet before marriage?

In cases wherein one party purchased or adopted a pet before marriage, he or she is more likely to be granted full ownership of the pet by court as long as he or she holds no reasonable threat to the well-being of the pet. In such cases, the other party may not have any legal recourse apart from trying to prove that it is in the pet’s best interests to stay with him or her. Once again, a pre-nup would solve most of these problems without heading into any messy legal areas.

Can custody be established?

Although a court in California rarely establish or enforce pet custody, a couple can do so under their Marital Settlement Agreement. Through this, you can establish a custody and visitation schedule for your pet. The negotiation process and the terms of the settlement will often bind the parties to the agreement. This can be easily set up through your mediation process without needing to involve a court. A family court judge will sign off on the agreement as long as both of you are able to agree to it.

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.  

3 Ways Small Business Owners Can Protect Business Assets In Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce lawyers; The Maggio Law FirmDivorce is a stressful experience, especially when it involves the division of properties, assets and businesses. For some, it is even more painful because a business is about all they have and splitting the business in two can cause a lot of financial damage. Small business owners know how tough it is to operate a business when the economy is constantly changing. Include a divorce and the stress reaches to new levels. So, what should a business owner do at times like these? They can follow three easy steps to limit the impact to their business from divorce.

  1. Maintain an amicable relationship with your ex

Nothing like a good talk between spouses when it comes to splitting businesses and assets. That’s the first thing you should do when faced with a similar situation. If your spouse is a business partner with you, it becomes even more crucial why an amicable relationship is necessary. Focus more on the business part and less on personal matters. An honest talk with your spouse can have great benefits for your business.

  1. Make prenuptial and postnuptial agreements

A prenuptial agreement is not the best gift your future spouse might be expecting from your side but it is more of a gift for your own self. It’s always better to stay optimistic about marriage. Signing a prenuptial agreement will give you the upper hand in business ownership. California is a state that has community property laws which mean that every property bought after marriage is likely to be split equally between both partners. In such cases, a postnuptial agreement comes in handy. It helps determine what part of the business each of you should own after it gets divided.

  1. Form a corporation or a trust

One of the best ways to protect the company and business assets is by forming a corporation or a trust. It’s best to incorporate the trust before you get married. It gives you sole ownership over your business and during divorce proceedings it becomes easy for you to defend it against a division.

If you form your company as a corporation or an LLC, you create a legal entity that is separately owned by you. However, if you use marital assets to pay for company expenses, it may be used to claim the company as a marital property.

By following these 3 steps, you will be able to avoid or at least minimize the damage a divorce can bring to your small business.

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 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.  

What To Know About Epstein Credits and Watts Charges

Posted by: Gerald A. Maggio, Esq.

Best Orange County divorce attorneys; The Maggio Law FirmIf you are a married couple that has decided to apply for a divorce in California, then one of the first major decisions you need to take is to determine who gets to stay in the house after the divorce. It does not matter whether your husband leaves you to stay with his new partner or if you decide to stay back in the interest of your kids. Staying at the marital home after the divorce comes with its own set of financial consequences. Epstein credits and Watts charges come from a couple of cases that are now commonly used as a precedent in almost every other California divorce case:

  • Epstein Credits – In 1979, the California Supreme court decided that if a spouse pays a community debt, then he/she is owed credit on that payment. For instance, if you pay the mortgage, then your spouse is obligated to pay 50 percent of it after the divorce and vice versa. But, there’s a catch. Epstein credits don’t apply if the payments are made out of a bank account shared by both the spouses.
  • Watts Charges – In 1985, the California Supreme court decided that if a spouse uses community property after separation, then he/she might be ordered to pay his/her share of the fee for using it. For instance, if your husband leaves the property and you continue to live there with your credits, then you might have to pay rent to your husband if you want to keep using it. He has the right to request for up to half of the rental value of your property. The key thing to take into consideration here is that if the rent is higher than the mortgage, then you will end up losing money if you continue to stay there after the divorce.

Both Watts Charges and Epstein Credits can be directly applied in the divorce settlement. If your spouse pays the mortgage and you stay in the home, the settlement amount will be significantly reduced by Epstein Credits and Watts Charges. You and your spouse can go for a temporary settlement that includes either your side of the mortgage payments or your stay in the property during the divorce as support. If the court allows you to stay in the property as support, you will not be given any Epstein Credits or Watts Charges.  The courts can consider the income of each spouse, the number of children, and other factors before they award them.  These credits and charges can be complicated to determine, so you should seek the advice of legal counsel for further explanation and assistance.

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.  

Does Your Divorce Affect Your Vehicle Insurance?

Posted by: Gerald A. Maggio, Esq.

divorce lawyers in Orange County; The Maggio Law FirmAny couple that files for their divorce has to also deal with the proper distribution of their marital assets. But, there is something that many people do not consider. They often overlook the impact of the divorce on their car insurance. Divorce can affect various aspects of the couples’ car insurance including changes in rates to buy a new insurance policy.

Relationship between premium and marital status

The premium for your car insurance policy is the amount that should be paid by you to insure your car against damages including caused due to accidents. However, it is important to note that the premium rate is not same for everybody. In other words, there could be different rates for different people, state to state and even city to city. Insurers will take into account various factors to determine the premiums for the policyholders. But, it is true that your marital status may affect the rate of premiums directly as well as indirectly.

Single versus married

As per a study made by the Insurance Quotes, married people usually need to pay lower premiums as compared to their single counterparts. For instance, a married man who is thirty-five years old may have to pay as much as 3 percent less in some States for their auto insurance as compared to a single man, who is of the same age. On the other hand, a 35-year-old single woman has to pay 2.75 percent more than her married counterpart of the same age. The reason for this is it is statistically proved that married people’s involvement in auto accidents are fewer than in married people.

Indirect effects of divorce on car insurance

The car insurance premiums can be indirectly affected by a divorce too.  For instance, in many states, men have to pay higher rates of premiums as compared to women. So when a woman is single once again after her divorce, her premium may lower after the divorce comes through.

The place where you start living after your divorce got finalized may also alter your premium.  Premium rates for car insurance are more for all those people who live in urban areas as compared to the suburbs. Moreover, premium rates may not be same for two different suburbs.

There could be also an increase in premium rates since the multi-driver discounts or discounts for purchasing more than one policies will no longer be available to you after your divorce. Such policies include both homeowners’ policies and car insurance policies.

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.  

What to Know About Dividing Pension Plans In A Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce lawyers; The Maggio Law FirmPension plans are usually divided in one of only two ways: buying out the other spouse’s present day value in the pension or by reserving juridiction to divide the plan by a Qualified Domestic Relations Order (QDRO).  The latter option is more common way in which to handle such plans. Under this option, it is ordered by the court that at the time of retirement of the employed spouse, the other one will be the recipient of a percentage of every pension check. This percentage is arrived at by dividing years when the spouses spent together in their once home as wife and husband by total number of all years when the spouse who is employed had participated in pension plan. The result amount of that division is community property percentage of pension plan. To give an example, if a husband has put in 20 years of his monetary contributions to a pension plan, and 10 of the coinciding years he lived with the wife, the share of the pension plan will be about 50 percent. In such a case, the wife will have 25 percent of the pension checks of the husband. 

Pension Benefits  

As per reservation of jurisdiction, the spouse considered a non-employee could elect to receive her or his share of the pension benefits of the employee spouse at earliest time when the employed spouse will retire. It means that in the case of the employed spouse electing not to retire at earliest opportunity, that spouse must pay the non-employed spouse what the latter would have got in case the employed spouse would have retired. To give an example, if the husband becomes eligible to retire at 55, but elects not to retire in that age, his ex-wife could demand that he provides her the amount of money she would have received if he retired during that age. It is to be mentioned that in case the wife selects this option, she will not receive any increases due to higher cost of living after that date.

Qualified Domestic Relations Orders (QDRO)

The Federal Retirement Equity Act created “Qualified Domestic Relations Orders”. In this system, the court gives orders regarding the retirement plan of the spouse. The Federal law states that the employer must comply with the order terms.  However, the QDRO is an essential step in the dissolution process. A number of companies have been created for the sole aim of making them and there are attorneys who only specialize in doing QDROs.

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.