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.  

Credit Scores Can Be Affected By Child Support Payments

Posted by: Gerald A. Maggio, Esq.

Divorce attorneys in Orange County; The Maggio Law Firm, Inc.During divorce, there are many factors that can negatively affect an individual. Child support payments are serious matters and default payments can even land an individual in jail. But there is another problem that arises due to untimely child support payments. Credit scores are also affected. Timely payments can strengthen the credit score and irregular payments can have the opposite effect.

Child support payments are seen with the same importance as mortgage or vehicles by credit companies. Child support reports default payments to credit companies. The credit companies keep a track of individuals with defaults. Default payments have an effect on loans or interest rates.

Individuals who wish to know how the child support system works should consider looking at the specific rules and regulations in the respective states.  In some states, child support dues are reported only after a certain time whereas in other states the dues are reported as and when the default takes place.

How do late payments affect credit scores?

There are many reasons why parents miss out on child support payments. They could be between jobs or their income has been reduced or there could be some other reason. One of the things the parents can do during such situations is, inform the court and put a temporary pause on the child support obligation. In cases where the petitions are not filed or the parent fails to take the necessary steps, the missing payments start showing up on the credit scores. Parents who stop receiving child support can sue the other parent and if the former wins then the credit score becomes worse. Child support obligations are very important and its relation with the credit score can be a complex matter.

In any case, it better to hire a lawyer before things go out of hand. An attorney who is experienced in the field of child support obligations and credit scores can provide a better understanding on the matter.

Conclusion

Credit scores are important for getting loans or good interest rates and should therefore never have a negative result. Failure to pay for child support can negatively effect credit scores depending on how jurisdictions report such failures to pay. But there are ways to prevent negative scores and parents can follow necessary steps to ensure they don’t end up with a bad score.

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.  

Smart Tips for Stay-At-Home Mothers Facing Divorce

Posted by: Gerald A. Maggio, Esq.

Child custody attorneys Orange County; The Maggio Law FirmBoth you and your former spouse had your own distinct roles while you were married and a stay at home mother. While your ex husband worked outside, you did your work inside the home. In fact, everything went on pretty well.

But now that you are getting divorced, you need to do plenty of things to ensure that your divorce remains a smooth process. It is particularly true since you are looking forward to a fresh beginning after your divorce comes through.

Here are some of the smart tips, which can be a big differentiator to thrive successfully after your divorce gets finalized,

Get yourself an experienced accountant

It may be the case that both you and your then spouse have hired an accountant while you were married. but now that a divorce period has been already filed, it is better to have a separate accountant . You should have your own accountant for two main reasons. Firstly, there could be occasions during the divorce proceeding when an accountant will be needed by you for reviewing potential settlements. He or she will help you to realize what could be the consequences in terms of taxation. When you have a separate accountant, you can get the get the best possible guidance from them. Secondly, divorce may have some tax implications. It is particularly true in the first couple of years.  For instance you could be a co-owner of your home. Alternatively you may have to file certain forms to make sure that your returns are filed properly. When you have an accountant to guide you, handling such issues becomes child play.

You need to have a reputable financial adviser in your team

Just like having an accountant can save your headaches with respect to taxes, a good financial advisor can guide you in examining choices of potential settlement from the perspective of both future plans and cash on hand. They can even advise you to invest in non-retirement or retirement funds that you get as a result of your divorce settlement. Thus they will help you to carve out a budget so that you are aware the kind of support required for you after the divorce and help you to be out of financial difficulty.

Get an appraisal of your home done

A big blunder committed by many estranged couples is that they make a guess of the worth of their home. Your house could be the biggest asset so its proper calculation is a must. It will not be of much use to rely on only certain real-estate sites.

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.  

Documents Your Divorce Lawyer Will Need In The Divorce

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorneys; The Maggio Law FirmYour divorce attorney will need certain crucial financial documents before the divorce proceedings start and during such proceedings. Some such documents include income related documents and tax returns.  Other documents that your lawyer will need are property valuations, marital debts, documentation of assets, and related documents.

While you are getting your documents, your attorney may ask for digital or hard copies of them. However, you should make it a point to keep copies of all those documents you handed over to your divorce attorney. If you have handed them over the digital copies, save another copy either online using a cloud based service or take a backup of it. When you show these documents online through software like Google Docs, you can easily access them and you can always fetch them even if your system crashes,

It is also imperative that an organized and complete file with all the relevant documents is submitted to your attorney. It will then enable to make your negotiation process run in a smoother manner. On the other hand, when you need to approach the court, a well-organized file will help you to provide better supportive evidence in your favor.

  1. Income related documents
  • If you are employed, you need to collate pay slips from both your present and previous employers for the last one year. In case you are self-employed, you need to submit business forms or income tax returns that are associated with the income generated from your self-employment.
  • If possible, get the pay slips of your spouse for the same duration.
  • You need to also submit copies of individual or joint tax returns as applicable for both federal and state for the last 3 years.
  • When either your spouse or you are self-employed, it is also necessary to get documents relevant to your business expenses.
  • Copies of statements highlighting net worth or any other financial statements that were prepared by your spouse or you to secure bank loans.
  1. Real estate related documents
  • Present mortgage statements that you could be having on a real estate asset.
  • All documents that legally describe whether the said real estate is owned separately or together.
  • Documents related to the real estate’s initial purchase.
  • Statement of tax assessor related to a real estate.
  • In case any refinancing has been done for a real estate, you need to submit all the documents related to such a refinance.

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.  

Factors to Consider Before Accepting a Lump Sum In Your Divorce Settlement

Posted by: Gerald A. Maggio, Esq.

Orange County divorce attorney; The Maggio Law FirmAre you one of those couples who are in the most of your divorce settlement negotiations? If that is so, you should contemplate properly before angering to accept a lump sum as your settlement. In case the non-earning spouse is offered a lump sum in lieu of his or her divorce settlement. The money is needed to support that person’s future lifestyle. However, it often gets quite abstract.

If you are trying to ascertain whether the lump sum offered to you is adequate or not the most important factors to consider are:

  • The plans for investment returns or the growth of that money, which is further dependent on various financial variables
  • Cost of supporting that person’s future lifestyle subject to the evolving requirements and inflation

However, it is not an easy task to estimate the number of funds in today’s currency is required to fund his or her future lifestyle even when that person is financially savvy. It is also tough to determine how the future lifestyle of that person will look like on the basis of getting a lump sum as a divorce settlement today. If you are going through such uncertainties, time to engage a professional and reputable financial planner to help you out.

A good financial planner helps in assisting you with respect to a lump sum money offered during your divorce settlement

Contrary to several attorneys, an experienced financial planner who knows how to work on matrimonial issues is aware of how to look beyond these financial abstractions.  They are equipped to interpret as well as communicate alternative situations the clients. When these planners accept these kinds of matrimonial engagements, their key tool is to come up with a cash flow projection for many years, which is generated on certain logical and reasonable assumptions.

It is difficult to anticipate future expenses and project the cash sources needed to fund such expenses are even tougher. Returns on your investments are dependent on the allocation of your portfolio asset. That, in turn, rely on factors like how much tolerant you are for taking investment task, the capability of replacing lost capital, your age and other economic resources available before you.

It may not be the right thing to do it alone. It makes sense to hire an experienced financial planner who is well aware of such an exercise with his or her other clients. The advisor should have in-depth knowledge of tax laws, should be intuitive, emotionally intelligent and is skilled in portfolio construction.

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.  

Should You File Taxes Separately or Jointly During Divorce?

Posted by: Gerald A. Maggio, Esq.

Top divorce lawyers Orange County; The Maggio Law FirmIn case your divorce is not yet finalized, you could file joint return if you remain married at the end of a tax year or as of December 31. Both husband and wife must provide consent to this filing. If there is no consent and you are still married, then your options are to file “married filing separately” or “head of household.”  When you check the “married filing jointly” box, it is represented to the tax authorities that you are married. This is valid even if you in reality separated and there remains no court judgment which ends this marital status. Any temporary order that relates to child custody, child support or alimony does not affect the marital status. In case the divorce is regarded as final in December 31, it will not be possible for you to file a joint tax return. In such cases, the filing status will be either “head of household” or just “single.”

Discussion is vital

It is important that you discuss all the advantages and disadvantages of filing joint return with either your attorney or your tax advisor. Generally, but not at all times, if you file jointly, your tax burdens will be lowered. This will depend on you and your spouse’s respective incomes, credits and deductions. Principal disadvantage of joint filing is that both the spouses are severally and jointly liable for taxwes on return. These includes any tax deficiencies, penalties and also interest. You can protect this a little with the Tax Indemnification Agreement. The IRS could also permit relief to the spouse who files taxes jointly. There are three kinds of IRS relief, namely equitable relief, innocent relief and separation of liability.

Domestic partners and the same sex

Registered domestic partners and married couples of the same sex cannot file any kind of joint federal returns under any kind of circumstances. For any couple who reside in a state where same sex marriage remains legal or any marriage equivalent relationship is found could file their joint tax returns.

In case your spouse had consented earlier to joint return but refusing in the present

Many spouses use tax filing statuses as their bargaining tool. This makes sense as both the spouses should consent to file joint return. The California court will desist from ordering any unwilling spouse to file joint return. Only in rare circumstances, IRS may accept joint return that is signed by one spouse. Consult your tax attorney if you want IRS to sign single.

Protecting both spouses while filing joint return during divorce

Ensure that the marital settlement judgment or the agreement or the separate agreement explains how to tackle any refunds or tax liability. In case a refund is to be paid through check, ensure that check is paid to both spouses jointly. This will also be valid in case there is a written agreement of the recipient paying the other for any share the spouse should have. In case direct deposit is the mode of refund, do have it passed through joint account or make a written agreement. There is no requirement share refunds or the tax liabilities equally.

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.  

 
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