Am I Entitled to My Spouse’s Stock Options?

Stock options are a form of compensation issued to employees that allows the employee to buy stock in the company at a set price regardless of the value of the stock. Normally, the option price is lower than the actual value of the stock allowing the employee to receive an economic benefit from the exercise of the option. For instance, if the employee is granted an option to purchase 100 shares of stock at a price of $1 per share and the stock is valued at $100 per share, the employee could exercise the option to purchase by paying $100 and would receive stock worth $10,000.

Stock options usually vest over a period of employment maintained by the employee. It is important to understand the date of grant and the vesting schedule in order to determine whether the community has an interest in the stock options. If the options were granted during the marriage and fully vested prior to the date of separation, then 100% of the options are community property. If the options were granted during the marriage, but only a portion vested during the marriage, the community has a proportional interest in the options. Often, a Nelson formula is applied to determine the community interest in the options. It is important to work with an attorney who understands the division of stock options as part of the resolution of your divorce.

Categories: Division of Assets, Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

How to Obtain Your Spouse’s Financial Information

It is critical to understand your financial picture when you are going through a divorce. Often, your spouse holds important information about your finances that you do not have access to. There are several mechanisms through which you can obtain your spouse’s financial information, all of which fall under the general process called “discovery.”

Financial disclosure is mandated by law

In family law cases, full, financial disclosure is mandated by law. That means that both parties to the divorce action are required to exchange complete financial disclosures prior to finalizing their divorce. However, often, the mandatory financial disclosures are lacking in critical information about the value of a business, the true income of the other party or the value of certain assets.

Your options if the disclosure doesn’t have enough of your spouse’s financial information

In the event that the information contained in the mandatory disclosures is insufficient to enable you to determine the value of assets and liabilities or to determine what the other spouse’s compensation is for purposes of calculation of support, you can issue formal discovery requests in the form of a Request for Production of Documents, Interrogatories (Special or Form), Requests for Admissions, Subpoenas, and Notices of Depositions.

Each discovery tool requires the responding party to provide the information requested in the discovery. For instance, if one party issues a Request for Production of Documents, the responding party is required to respond to the request and provide all documents responsive to the request within 30 days. Likewise, Interrogatories and Requests for Admission require the responding party to respond, in writing and under penalty of perjury, to the questions asked in the Interrogatories or Requests for Admissions.

Depositions require the person being deposed to appear and answer questions under penalty of perjury and subpoenas require third parties (i.e. employers and financial institutions) to provide documents related to the other party.

Which discovery tools are right for you?

To learn which discovery tools would be right in your case, call Rachel Castrejon.

Categories: Division of Assets, Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

Innocent Spouse Relief in Tax Law

Generally, both spouses are responsible for paying any tax, interest, or penalties from their joint tax return. If you are going through a divorce and believe your current or soon to be former spouse should be solely responsible for an error or an underpayment of tax from your joint return, you may be eligible for innocent spouse relief. By filing a Request for Innocent Spouse Relief (IRS form 8857), you can ask the IRS to consider granting relief based on certain factors, including, but not limited to:

  • Your current financial situation
  • How involved you were with your family finances and preparing the tax returns
  • Whether you were (or are) a victim of domestic violence.

While your request is being considered, the IRS generally cannot collect any tax from you for the year(s) you request relief, but it does extend the amount of time the IRS has to collect any tax owed.

You must meet all of the following conditions in order to qualify for innocent spouse relief:

  • You filed a joint return which has an understatement of tax, due to unreported income or incorrect deduction, of your spouse (or former spouse).
  • You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax.
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax. According to the IRS, divorce, separation or desertion are examples of unfairness.
  • You and your spouse (or former spouse) have not transferred property to one another as part of a fraudulent scheme. A fraudulent scheme includes a scheme to defraud the IRS or another third party, such as an ex-spouse.

The IRS will make a determination within 6 months of the filing of a request for Innocent Spouse Relief. By law, the IRS must contact your spouse or former spouse concerning your request.

If you are going through a divorce and you are paying taxes for income that you were unaware of, you should speak with a lawyer to determine whether filing for innocent spouse relief is an option.

Categories: Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

Can I Still Deduct Alimony/Spousal Support?

The most profound effect the new Tax Cuts and Jobs Act (TCJA) has had on divorce planning is with regard to taxation of alimony payments. Before TCJA, payments that could be defined under tax-law as alimony would be considered deductible by the payor for federal income tax purposes, while the recipients of alimony would have to report the payments as taxable income.

Under the new rules, however, the payor is no longer be able to deduct alimony payments and the recipient no longer pays tax on the income. This change applies to support or maintenance payments made pursuant to a judgment, written separation agreement or temporary order that is either:

• Executed after 12/31/2018

• Executed on or before 12/31/2018 but modified after that date, if the modification expressly provides that the amendments made by this section apply to such modification.

It is clear that a judgment, temporary order or written separation agreement entered prior to January 1, 2019, falls under the pre-TCJA law and maintains its tax-deductible/taxable status as defined in the judgment, temporary order or written separation agreement. It is also clear that any modifications made after December 31, 2018, would need to expressly provide that TCJA was applicable in order to lose the tax-deductible/taxable status from the prior order.

For temporary orders, judgments or written separation agreement that contain initial orders for alimony or spousal support entered after December 31, 2018, the new TCJA law applies and spousal support is not tax-deductible to the payor and not taxable to the payee.

What is unclear is whether a pre-December 31, 2018 order, judgment or separation agreement that is changed by a subsequent judgment of dissolution would qualify to the tax treatment specified in the pre-December 31, 2018 order. Whether the pre-TCJA or TCJA tax regulations will apply to these judgments is a matter yet to be decided.

In addition, California has not conformed to the new law and parties could find themselves in a situation where under California law they would have deductible and taxable alimony but for federal purposes, the alimony paid would be nondeductible and nontaxable.

For a consultation on your specific situation, Call Rachel Castrejon.

Categories: Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

Confused about Divorce Options?

Are you or your spouse thinking about divorce, but have no idea how to go about it? Here are some divorce options.

1. Mediation

You and your spouse can work with a mediator to help you reach an agreement on any issues in the case (i.e. child custody, child support, spousal support, property division, etc.). A mediator can also prepare all the paperwork that needs to be filed with the court to complete the divorce process. Rachel is a qualified mediator and works as a neutral intermediary to facilitate an agreement between the two parties involved. Customarily, and presuming that both parties provide financial information in a timely manner, a case can be resolved in two or three sessions that last approximately two hours each. Mediation can result in a substantial cost savings to the parties. Mediation is also beneficial because, instead of letting the court decide things like how to divide your property or how much time you should spend with your children, you and your spouse can decide. If you would like to set up a consultation regarding mediation, please contact us.

What if the other spouse/parent will not agree to mediation?

Both parties must agree to mediate for mediation to take place. Often, one spouse/parent may not have come to terms with the end of the relationship and it is difficult to convince them to start the mediation process. See the section below “What if the other spouse/parent will not accept that you want to breakup?” for further strategies for getting the case into mediation.

2. Litigation

Litigation is a term that is used broadly in family law to describe cases in which immediate orders are necessary because the parties cannot reach an agreement. This would include circumstances where one spouse is the financial support for the family and is not providing support to the other spouse or the children, domestic violence situations, cases in which the children are at risk with a parent because of drug or alcohol abuse, or where one of the party’s is misusing community property. Whether you are the spouse/parent who receives the court filing or spouse/parent who needs to file a request for order with the court, Rachel will assist you in addressing your immediate concerns and assessing the best possible strategy for the resolution of the issues.

What if the other spouse/parent will not accept that you want to breakup?

Hiring an attorney to start the divorce or parentage process can also be helpful in a case where one of the spouses or one of the parents in non-marital parentage action has not come to terms with the fact that the relationship is over. In these situations, it may be difficult to get the other party into mediation or to even have a discussion with the other party about how to resolve property, support and child custody issues. In such a case, it can be helpful to file a Petition for Dissolution of Marriage or a Parentage action to move the case forward. Rachel tries to approach these cases in the least contentious manner possible by filing the paperwork with the court and providing options to the other party for resolution through mediation. This will usually prompt the other spouse/parent to retain an attorney which often facilitates the resolution of the issues.

If I hire Rachel as my attorney, does that mean we have to go to court or litigate?

If you hire Rachel as your attorney, you do not necessarily need to go to court/litigate unless you are unable to reach an agreement either through mediation or other settlement strategies. Rachel makes every effort to resolve cases short of filing requests for order with the court. To that end, she works with opposing counsel to try and resolve as many issues as possible. Rachel also represents clients who are working with mediators. In this capacity, Rachel acts as an advisor to the client so they are informed of their rights and understand whether a settlement agreement is a reasonable resolution in their case.

Categories: Divorce, Mediation

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

The Primary Factors in Child Support

How is Child Support Calculated?

In California, there is a mandatory statutory guideline formula for calculating support. (Family Code section 4050 et seq.) The following is a list of the primary factors that the court will use in determining child support. Other factors can influence child support and it is best to consult with an attorney regarding the specific circumstances of your case to get accurate information about what child support would be in your case.

Timeshare with the Children

The guideline formula takes into consideration the amount of time each parent spends with the child(ren). The time-share component represents the approximate percentage of time that the high earner has or will have primary physical responsibility for the child compared to the other parent. (Family Code section 4055(b)(1)(D).) The difference between physical responsibility and physical custody is an important statutory distinction. The court will base timeshare on the amount of time that you are responsible for your child(ren) regardless of whether the child is actually with you. For instance, if the child(ren) is in school, but it is your responsibility to pick-up the child in the event of an emergency, the child is your responsibility and the school hours will be included in your timeshare.

The Income of Each Party

Family Code section 4058 defines the income available for support. Mandatory income that the court must consider in issuing an order for child support includes income from whatever source it is derived, including, but not limited to the following:

  • Salaries and wages
  • Bonuses and commissions
  • Business and Self Employment income
  • Royalties
  • Rents
  • Dividends and interest.
  • Pensions and annuities.
  • Workers compensation benefits.
  • Unemployment insurance benefits
  • Disability insurance benefits
  • Social security benefits
  • Military allowances, including housing and food allowances
  • Spousal support received from a person who is not a party to the child support proceeding
  • Trust income

What if One Parent Doesn’t Have Income?

If one of the parents is unemployed or underemployed (i.e. not earning commensurate with his or her earning capacity), the court may impute income to that parent for purposes of calculating child support. (Family Code section 4058(b).) In order to impute income to a parent, the court must find that the parent has both the ability and opportunity to earn income.

Exceptions to the Application of the Guideline Formula

Courts are required to adhere to the guideline formula and may depart from it only in the special circumstances specified in the guideline. (Family Code § 4052) The presumption that the guideline formula amount, is the correct amount of child support may only be rebutted by admissible evidence showing that the application of the formula would be unjust or inappropriate in the particular case, consistent with the principles set forth in Family Code section 4053 based on one of the factors set forth in Family Code section 4057.

  • The parties stipulate to a different amount of support
  • The sale of the family home has been deferred
  • The payor of child support has extraordinarily high income such that an order under the formula would exceed the child’s reasonable needs
  • A parent is not contributing to the child’s needs commensurate with that parent’s timeshare
  • Application of the formula would be unjust because of special circumstances in the case such as
    • When the parents have different timesharing arrangements for different children
    • The parents have substantially equal timeshare of the children and one parent has a much higher or lower percentage of income used for housing than the other parent
    • The children have special medical or other needs that would require greater support than the formula amount

Categories: Child Support, Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

How to Support Your Special Needs Child Through a Divorce

Whether a child is severely disabled or has moderate learning disabilities such as dyslexia, dysgraphia or auditory processing issues, their ability to thrive depends on continuity and stability.  Thus, parents who are going through a divorce with a special needs child should consider how best to support continuity and stability to foster the best possible outcome for their child with special needs.

Positive and Supportive Co-parenting

Positive and supportive co-parenting is critical to achieving the best outcome for children of divorce. This is especially true if your child has special needs.  Children with disabilities suffer from a host of issues such as anxiety, lack of self-esteem, inability to focus, depression and bullying.  Positive and supportive co-parenting means that both parents are involved in planning and participating in activities, educational support networks and medical/therapeutic treatments for the special needs child.  Imagine a situation where both parents employ the same tools and techniques in both households so that the special needs child has consistency while living in two homes.  This requires significant communication and trust between the parents.

Co-parenting Therapy

If you are in a situation where co-parenting feels impossible, see if you can meet with a co-parenting counselor who specializes in high conflict divorce and special needs children.  A qualified professional therapist should be able to assist you in achieving more parity between households.

When Co-parenting Fails, a Parenting Coordinator is Helpful

If parents agree to use a parenting coordinator, the parenting coordinator will help the parents navigate important day-to-day decisions that need to be made to best serve a child of divorced parents. This is particularly helpful when a child has special needs as there is often ongoing adjustments to educational and medical programs and structures.  A parenting coordinator generally will help facilitate and agreement between the parents and, if no agreement is reached, the parenting coordinator can make recommendations or orders regarding the disputed issues.  This process allows the parties to resolve smaller, ongoing issues in a more expeditious manner than going through the court process.

Determining a Custody Schedule that is Best for Your Special Needs Child

It is likely that a child with special needs will benefit from having consistency and continuity between households.  Often, this means compromise between the parents regarding scheduling of custodial time.  There are many ways to maximize the time that a child spends with each parent without creating disruption for the child’s academic, social and emotional health.  Working with both a mental health professional and an attorney to help craft a schedule that would work best for a special needs child is critical to the long-term emotional, social and academic health of the child.

Categories: Child Support, Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

5 Ways to Protect Your Divorce Property Equalizing Payment

Frequently, divorcing couples agree to divide property pursuant to a settlement agreement. Often, one of the parties is obligated to pay the other party an “equalizing payment.” The equalizing payment is the means by which both parties leave the marriage with substantially equal assets. Property division pursuant to a divorce agreement is a non-taxable event and, therefore, the party receiving the equalizing payment will not need to pay taxes on the amount received.

Equalizing Payment Pitfalls

Many times, an the parties agree to the equalizing payment being paid in installments over time. While this may be a convenient method of making a significant payment in comes with some pitfalls for the recipient party.

  1. The payment(s) do not survive bankruptcy.
    The party who is to receive the equalizing payment should consult with counsel to determine the best way to protect the equalizing payment in the event that the payor files for bankruptcy and seeks to discharge the equalizing payment pursuant to the bankruptcy.
  2. Lack of payment on schedule causes unwanted attorney’s fees and costs.
    If the payor does not make timely payments, the recipient would have to file an action with the court to enforce the terms of the agreement. This can be costly. Also, if the payor simply does not have the money to make the payments, an enforcement action may have little economic gain.
  3. The recipient does not have the benefit of the funds at the time of the divorce.
    If a payment plan is agreed upon, the recipient of the equalizing payment does not get the benefit of the funds until all of the equalizing payments are made. This deprives the recipient of the ability to use, invest of receive interest on the funds.

There are ways to protect against some the pitfalls described above.

  1. Consider agreeing to a support order that is not dischargeable in bankruptcy.
  2. Require a deed of trust against real property assigned to the payor. The deed of trust should secure the entire amount of the equalizing payment.
  3. Require interest to be paid on installment payments until paid in full.
  4. Specify remedies for failure to timely pay (i.e. sale of property, liquidation of
  5. If bankruptcy seems like a possibility, consult with a bankruptcy attorney.

It is very important to consider all the ramifications of property settlement prior to signing a divorce and property settlement. The information provided above is just a general overview of some of the issues that can arise. Each situation is unique and needs an independent evaluation of the terms of the settlement agreement to determine the best way to secure a property settlement.

Categories: Divorce, Property Division

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

Tax Reform: How it will Impact Spousal Support/Alimony Payments

If passed, the new tax reform bill introduced by Republicans will have a profound impact on couples getting divorced because the right to deduct alimony (spousal support) payments will be eliminated.

Under current law, the spouse who pays alimony is allowed to deduct the amount of alimony paid from his or her income making it tax deductible. The recipient of the alimony must report the alimony as income for tax purposes. Under the current law, proposed section 1309 of the tax reform bill eliminates the deduction for payment of alimony (https://waysandmeansforms.house.gov/uploadedfiles/bill_text.pdf).

Though the proposed amendment would not affect alimony/spousal support orders that took effect prior to December 31, 2017, it would affect all orders made after January 1, 2018. If the bill is passed, it will have profound effects on the amount of alimony a former spouse is able to pay. The cost of divorce is already high and the cost of maintaining two households instead of one is often unmanageable. The elimination of the tax deductibility of alimony will only increase the difficulty in resolving divorce matters. It will be imperative that the divorcing couple devise creative solutions to maximize the financial benefits for the family.

Categories: Divorce

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.

When Your Spouse Stops Contributing to House Expenses

Often, couples who are newly separated do not understand their obligations and rights regarding payment of the “family home” expenses. The law regarding payment of “joint expenses” post-separation is not intuitive and can feel unfair to the person who is left in the family home. That is because, under California law, the person left in the “family home” is responsible for all costs associated with the “family home” and could owe the spouse who is no longer residing in the home one-half the rental value of the “family home” even if the other spouse voluntarily chose to move out of the family home. Spouses rights and obligations regarding post-separation use of the family home and payment of community expenses with separate property are defined by two seminal cases, In re Marriage of Watts (1985) 171 Cal.App.3d 366 (“Watts”) and In re Marriage of Epstein (1979) 24 Cal.3d 76 (“Epstein”).

Do I really have to pay my ex-spouse one-half of the rental value of my home?

Pursuant to the holding in the Watts case, a spouse who remains in the family home may have to pay one-half of the net fair rental value of the home to the spouse who no longer lives in the family home (“the out spouse”). The right of the out spouse to recover one-half of the net rental value begins to accrue at the date the out spouse moves out of the home and continues until the community no longer has an interest in the home. Reimbursement of the fair rental value is not mandatory, but rather, the court has the discretion to order reimbursement for the reasonable use of the family home and should balance the equities in the case in determining whether to award one-half the rental value.

Do I really have to pay my ex-spouse for all the payments he made toward our joint debts?

Pursuant to the holding in the Epstein case, a spouse who, after the date of separation, uses earnings or other separate funds to pay preexisting community debt should be reimbursed for such payments from the community unless the payments of preexisting community debts constituted a discharge of the paying spouse’s duty to pay support to the other spouse. Any reimbursement for post-separation payment of community debts lies within the discretion of the trial court and is not mandatory.

How do I protect myself against fair rental value and reimbursement claims?

The best practice is to establish an agreement early on (i.e. before either spouse moves out of the house or as soon as possible after one spouse moves out) as to the use of the home and how the rental value will be treated at the time of dissolution. To avoid the risk of a reimbursement issue, it is best to agree on how community debts will be paid post-separation and to establish support orders either prior to separation or as soon after separation as practicable.

Categories: Divorce, Featured

About the Author

Rachel Castrejon opened her own law practice immediately after graduating from Loyola Law School and passing the California Bar exam in 1998. When she first opened her practice, she handled a variety of cases including wrongful termination, criminal appeals and family law matters. Ultimately, she chose to practice exclusively in the area of Family Law because she likes helping her clients through a very emotional process. Rachel’s goal is to help her clients through one of the most difficult times in their lives – the breakup of their family. Rachel understands the importance of achieving a resolution that is good for the entire family, particularly the children involved.

Learn more about Rachel

Disclaimer: The information and examples provided herein are based on the laws and regulations at the time of writing. Prior to deciding how to hold title in your property, you should consult with an accountant, probate attorney or family law attorney to determine the best way to hold your property for the purpose you want to accomplish.