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.
Are you or your spouse thinking about divorce, but have no idea how to go about it? Here are some divorce options.
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.
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.
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.
- 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.
- 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.
- 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.
- Consider agreeing to a support order that is not dischargeable in bankruptcy.
- 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.
- Require interest to be paid on installment payments until paid in full.
- Specify remedies for failure to timely pay (i.e. sale of property, liquidation of
- 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.
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.
There are three important questions to ask when determining what rights you have regarding the family home.
1. When was the home purchased?
If the home was purchased during the marriage and before the date of separation, it is presumptively community property which will be split equally unless either party has a right to reimbursement under Family Code section 2640. The community property presumption can be rebutted by one spouse claiming the property is separate property based on how title to the property is held.
2. How is title to the property held?
If title to the property is held by one spouse, the title presumption will trump the date of purchase presumption and the property will be deemed the separate property of the spouse who is on title. However, if the spouse took title in his or her name alone during the marriage and used community property to buy the property, the spouse who holds title must demonstrate that he or she took title with the other party’s knowledge and consent. Likewise, if one spouse acquired title during the marriage by the other spouse transferring his or her interest to the titled spouse, the spouse who holds title must demonstrate there was a valid transmutation of the character of the property from community property to separate property and that there was no undue influence in the transaction. A presumption of undue influence arises when a spouse gains an unfair by the change in character of the asset and the spouse who gained the unfair advantage must prove that the transfer was entered into knowingly, voluntarily and intelligently otherwise title will be restored to community property.
3. What can you do to protect your interest in the family home?
It is important to understand the consequences of taking title or changing title to a property during marriage. Before agreeing on how title will be held or signing a document transferring title to your spouse, you should seek legal advice so you can protect your interest in the family home.
There are four primary benefits to mediation:
- The parties can control the outcome of their case.
- Reduced Cost
- Less antagonism and emotional drain.
- Mediation is confidential.
In addition to the cost savings detailed above, mediation is a way for the divorcing couple to control the outcome of the case. When a case is not mediated and the parties have the court decide issues, the court is bound by certain rules and cannot deviate from those rules. In mediation, the parties can be creative in dividing property, continuing to hold property jointly, payments of spousal support and developing parenting plans. The mediator should assist you in achieving both parties’ goals for your family post-divorce. For instance, in certain cases it might be important for a spouse receiving spousal support to receive a lump sum at the outset of the divorce rather than receiving payments over time. Mediation allows a divorcing couple to agree on a one-time lump sum buyout of spousal support (aka alimony) while a court can only order monthly, ongoing payments if there is no agreement by the parties.
Mediation generally decreases the cost of getting divorced as an efficient mediator will usually help the parties resolve matters in a few two-hour sessions. Thus, the parties are incurring the cost of one mediator, rather than paying two attorneys to prepare documents to submit to the court.
Unlike the litigation process which often requires parties to submit filings to the court, which can create a lot of stress and cause the parties to make public very private matters, the mediation process enables parties to exchange information in a more informal way. Thus, the exchange of information is less anxiety provoking.
Finally, mediation is confidential. That means that you can discuss matters freely during mediation without worrying that the mediator will be called to court to testify about what was said. The open lines of communication allow for a more honest and family centered approach to mediation.
Are you going through a divorce and want to do it in a way that minimizes the anxiety, emotional turmoil and expense? If so, mediation is the right option of you.
Mediation is an alternative dispute resolution process that both parties agree to participate in rather than proceeding through the “court process” which requires the court to decide how to divide property, draft a parenting plan, and establish spousal and child support orders. During the course of the mediation, the parties will meet with the mediator to develop child custody parenting plans, divide assets, establish temporary support or income sharing arrangements and assist the parties in obtaining information from each other that is critical to the resolution of the divorce. As agreements are reached, the mediator memorializes the agreements in writing so that each party has an opportunity to review the terms with counsel prior to signing the documents.
Generally, it is recommended that each party consult with independent counsel to ensure that each party is comfortable with the terms of the agreement and that they fully understand the rights that they have with respect to the agreement. Though each party may consult with independent counsel, the cost associated with mediation is generally much lower than proceeding with court intervention where independent counsel is much more heavily involved.
Mediation allows you and your soon to be former spouse to control the outcome of your case rather than letting the court control the outcome. It also allows you openly and freely discuss issues that arise without fear that what is said in mediation will be used against you as the process is confidential. Thus, if you want a safe place to control the outcome of your divorce, mediation is the right choice for you.
Learn more about Mediation