How Is Debt Divided in California Divorces?

How Is Community Debt Divided in California Divorces?

Have you ever wondered how community debt is divided in a California divorce or legal separation? State law mandates that a couple’s community estate be divided “equally”, taking into account both assets and debt. It also provides several specific rules for dealing with debt.

Debt may be allocated as separate debt, community debt, or a combination of both. This determination is similar to the way community assets, or property, are handled. If you are not familiar with the concept of community property, please see our separate blog here.

As you might expect, separate debt is allocated to the person who incurred it. For example, under most circumstances, debt incurred by one of the parties either before or after the marriage will be the responsibility of that party. An additional category of separate debt about which many are unaware is debt incurred during the marriage that was “not incurred for the benefit of the community”. This type of debt is treated as the separate debt of the person who incurred it.

Community debt is handled differently. Under ideal circumstances, the parties agree on how they would like to allocate community debt; however, even if they do agree, the division of debt is not official until a judge enters a final order approving their agreement. If the parties cannot come to an agreement, the judge will do it for them.

The law provides additional rules to distinguish community from separate debt. Debt incurred after marriage but before separation is usually community debt, even if it is only in one spouse’s name. An example of this would be a credit card acquired during the marriage in the name of one spouse. The separate or community nature of debt incurred after separation but before judgment is entered depends on whether it was incurred for the “common necessaries of life of either spouse . . . or the children”. If the debt was for common necessaries, the court will allocate it according to the parties’ need and ability to pay it. If the expense was not for common necessaries, it will be allocated to the party who incurred the debt.

In allocating debt, there are additional considerations, called “reimbursements” or “credits”, that the court may assign due to payments made on the family home after separation, the use of the family home after separation, and payments made for education or training. These topics are discussed in separate blogs on our website.

If a couple’s community debts exceed its assets, the judge will assign excess debt according to what is just and reasonable. The court may consider the parties’ ability to pay, relative to one another, in making this determination.

The manner in which debt is allocated in a divorce or legal separation can impact you for the rest of your life. In hotly contested matters involving debt division, you need an attorney to protect your interests. The attorneys at the Law Offices of Judy L. Burger have extensive experience in property and debt division. Call today: (415) 293-8314.

How Do California Courts Determine Spousal and Partner Support?

How Do California Courts Determine Spousal Support and Partner Support?

Under California law, when a couple divorces or legally separates, a court can order spousal or partner support. Spousal or partner support can be ordered on a temporary basis, while the court case is pending. It can also be ordered by the court on a permanent basis at the end of the case, such as when a final divorce order is entered. Either way, a case must be pending before a court can become involved.

A court may enter a temporary support order to provide for support of a spouse or partner while the court case is pending. The factors used by California courts in determining the amount of a temporary order are set locally by court rule. For example, in San Francisco County, the local court rules provide that the Santa Clara schedule will be used to calculate the default amount of spousal support. However, the judge may decide, for reasons that constitute “good cause”, that a different amount is appropriate.

A court may also enter a permanent or long-term support order at the end of a case. California law mandates that many factors be considered by the judge in setting this award, including but not limited to the following:

  • The length of the marriage or partnership;
  • Each party’s age and health;
  • The Marital Standard of Living;
  • Each party’s debts and assets;
  • Each party’s needs;
  • Each party’s earning capacity;
  • The ability of the paying party to pay support;
  • The ability of the receiving party to work without adversely affecting the parties’ minor children;
  • The tax consequences to each party;
  • Whether one party helped the other to receive an education, a license, or a similar achievement; and
  • The occurrence of domestic violence between the parties or against their children.
The court must also consider “the goal that the supported party shall be self-supporting within a reasonable period of time”, as well as hardships presented to each party. It may also consider other matters that it considers are just and equitable to make a proper order of support.

As you might imagine, how these matters are presented to a court can make a significant difference in the support order. You want an attorney with substantial experience in Northern California who will represent you aggressively. Please contact The Law Offices of Judy L. Burger at (415) 259-6636 to learn more.
What Factors Do California Courts Consider in Setting Child Support?

What Factors Do California Courts Consider in Setting Child Support?

Parents have a mutual duty to support their minor children. Ideally, parents come to an acceptable agreement about financial support, an agreement that the court will approve. However, if they cannot or will not do so, a court must decide whether child support will be paid from one parent to another.  

The California State Legislature has found that the “state’s top priority” in setting child support is the best interests of children”. For this reason, California law sets forth guiding principles that courts must use when determining child support. These principles allow for both parents’ standards of living to be considered. They also allow for child support to be used to reduce significant disparities in the parents’ living standards.  

The factors considered in determining child support are set by law in California. A formula is used that takes several factors into account:
  • Both parents’ actual income;
  • The higher-earning parent’s net monthly disposable income;
  • The percentage of time that each parent will have “primary physical responsibility” for the children; and
  • The combined net monthly disposable income of each parent.
In addition, California courts must take into account the parties’ respective health insurance coverage. There is a proportional increase in the amount of support for each additional child.  

Once the amount of child support is established using the formula, it may be affected by other issues, including but not limited to the following:  

  • Extraordinarily high income of one parent;
  • Different time-sharing arrangements;
  • The amounts spent by each parent on housing; and
  • Special medical needs of the children.
In most cases, the income of the paying parent’s new spouse or partner is not taken into account as actual income. However, it may be considered if a parent quits his or her job to reduce income or if a parent attempts to hide income. 

The health and well-being of your children are important not only to you, but to the State of California. In hotly contested child support matters, you need an attorney to fight for you and your child. The attorneys at the Law Offices of Judy L. Burger have extensive experience in divorce, child custody, and child support matters. Make the call today to learn how our attorneys can protect you and your children: (415) 293-8314.  
What Is an Ex Parte Hearing?

What Is an Ex Parte Hearing?

Regardless of the circumstances, divorce and legal separation are difficult for everyone involved. Sometimes, however, they can be particularly stressful, such as when there is a threat of violence, danger, or significant financial injury.

Fortunately, the California judicial system has in place a procedure to deal with circumstances like these quickly: ex parte hearings.

Ex parte hearings are simply emergency hearings. Depending on a court’s caseload, it can take weeks or even months to get a hearing before a judge.

Ex parte hearings are designed to reduce that time drastically. However, they are only available for true emergencies, when there is a threat of
irreparable harm or immediate danger. Examples of factual circumstances that may warrant an ex parte hearing include the following:

  • child visitation or custody rights with a parent who leads a dangerous lifestyle;
  • a threat of grave injury to a couple’s children; and
  • a valid concern about depletion of community funds from a joint account.
An application for ex parte relief must be supported by very strong evidence of future irreparable harm or immediate danger. For example, exposure of a young child to alcohol and drugs could warrant an application for an ex parte hearing. Likewise, the prior acts of a spouse wiping out community funds from one bank account would likely warrant ex parte relief to prevent him or her from doing the same thing with other accounts.

In most cases, the person against whom an order will operate, usually the other party to the divorce or custody proceeding, has a right to notice before an ex parte hearing is held. This is because the judge may order relief that contravenes that person’s rights, such as the right to visitation or the right to access his or her own money. However, when absolutely necessary, notice may be avoided. This is only true if providing notice will result in immediate, irreparable harm.

Care must be taken when requesting ex parte relief. If it is requested unnecessarily, it can affect the court’s view of the parties in future proceedings. Judy Burger is experienced in presenting ex parte issues in the San Francisco Bay and Sacramento areas. If you believe ex parte relief may be needed in your case, contact her today at (415) 259-6636.
How Is a Business Interest Valued in a California Divorce?

How Is a Business Interest Valued in a California Divorce?

For those going through a divorce or contemplating one, a common concern is how a business interest will be treated by the court. Sometimes, both spouses own a business together. Other times, however, only one spouse has an ownership interest in a business.

By law, California courts must make a substantially equal division of community-owned property. Therefore, the first step in deciding how to deal with a business ownership interest is to determine whether it is separate or community property. It may even be a little of both. If you are not familiar with basic property law in California divorces, please see our separate blog here.

If the couple started the business together and operated it together, the court will likely decide it is a community-owned asset. However, often, business ownership is not so clear. For example, sometimes, a business was started before the couple married. Other times, although one spouse may be the owner “on paper”, the other may have worked in the business and contributed substantial value to it. In more complicated cases such as these, the court will need to decide issues such as the value of the business at the time of marriage and the present, the value of spousal contributions to the business, and other difficult factual questions.

It is usually necessary, in these cases, to retain a forensic accountant. Forensic accountants are trained in both accounting and investigative techniques. For this reason, they can be invaluable partners in determining the value of a business and in presenting their valuations to a court.

Forensic accountants are experts at detecting irregularities in company records. Their findings can help demonstrate, for instance, if one spouse has altered company records to make it look like a business is more or less profitable than it really is. Ultimately, the accountant will give an expert opinion about the value of the business. One of three methods is typically used:

    • the income approach, which attempts to value future economic benefits;
    • the market approach, which compares the business to others that have recently been sold; and
    • the asset approach, which compares the relative assets of the business to its liabilities.
If the parties do not agree about how to divide a business ownership interest, the court will divide it for them, keeping in mind that their community property must be divided substantially equally. How this takes place is within the court’s discretion. Options available to it include awarding the business to the spouse who plays the greatest role in its operation, awarding it to the other spouse, dividing the stock ownership among the parties, and ordering the sale of the business.

Business ownership interests are among the more difficult issues that arise in family law, and how they are handled can affect the parties for the rest of their lives. The attorneys at The Law Offices of Judy L. Burger have extensive experience in all matters relating to property division, including dealing with business interests and forensic accounting. Make the call today to learn how our attorneys can protect your financial future: (415) 293-8314.
The Intentional Breach of a Spouse's Fiduciary Duty

The Intentional Breach of a Spouse’s Fiduciary Duty

A fiduciary duty is one in which one party owes another the highest duty of care. For example, someone serving as an executor of an estate has a duty to handle its property and finances with the utmost care. An executor cannot misappropriate money or steal property belonging to the estate, or he may be liable for damages.

Similarly, California law places a fiduciary duty on each spouse to act in the best interest of the other spouse. California Family Code § 721 explains that spouses have “a duty of the highest good faith and fair dealing” with each other and that “neither shall take any unfair advantage of the other.” This fiduciary duty includes three core components: (1) allowing access to records of financial transactions; (2) providing accurate and complete information about community property transactions; and (3) treating benefits and profits from certain community property transactions fairly and accounting to the other spouse for them.

In addition, California law provides a duty of full disclosure regarding all community assets. The duty applies during the period of marriage and after the parties separate, until the item is divided by the court or the parties. Indeed, the California laws regarding divorce provide a formal method by which the assets and liabilities of each party are disclosed to the other.

What happens if one spouse does not perform his or her fiduciary duties? The failure to perform these duties is a called a “breach,” and the law sets forth what happens when there is a breach. The consequence that is imposed depends upon the seriousness of the breach and the view of the family court.

Examples of ways that parties may breach their fiduciary duties include hiding assets or transferring assets to try to deprive the other spouse of any interest in them. The law provides several remedies, or consequences, for a breach of spousal fiduciary duties, including the following:

  • A court-ordered accounting and determination of rights of ownership;
  • The placement of the name of a party on the title of an asset;
  • An award of either 50% of an undisclosed or transferred asset or of an amount of money to compensate the injured party for the loss of interest in that asset; and
  • Attorney’s fees and court costs.
In particularly egregious cases, the family court can order the breaching party to give the injured party the whole asset or to pay the injured party its full value . When fraud, oppression, or malice have been adequately proven, the court may award punitive damages, designed to punish the breaching party . It is sometimes necessary to hire a forensic accountant to show that a spouse intentionally breached his or her fiduciary duty. A forensic accountant is trained to trace funds and assets, which can help demonstrate that a spouse intended to hide or misappropriate community assets.

Breach of the spousal fiduciary duty is serious wrongdoing. If you are concerned that your spouse may be attempting to hide or minimize assets, you need an aggressive lawyer who will fight on your behalf. The attorneys at the Law Offices of Judy L. Burger have extensive experience in contested divorce and property proceedings. Call today to learn how our attorneys can protect your property interests as you go through this difficult time: (415) 293-8314.
Who Gets the Family Home in a California Divorce?

Who Gets the Family Home in a California Divorce?

In a divorce, one of the most significant concerns is what will happen with the family home. This is particularly true when minor children are involved.

The family residence is often the largest asset owned by the parties to a divorce, so the financial interest is often significant. In addition, there can be a sentimental attachment to the home. For these reasons, dividing the parties’ interest in the family home can be easier said than done. The first task is to decide who actually owns the house. You can learn more about determining basic ownership interests here.

It is not always easy to apply property law when dividing the family residence. For instance, what happens if the down payment was made with separate property funds? What if both parties contributed to pay down the mortgage while they were married, but the home is titled in just one name?

When there is a community property interest in the residence, there are three basic ways it can be divided: (1) sell the property outright and apply the profits toward the couple’s community property estate, to be divided; (2) one spouse buys out the other’s interest, assuming the purchasing spouse has adequate funds or credit to do so; and (3) deferred sale.

The first two of these options are fairly straightforward. However, a “deferred sale of home order”, also known as a “Duke” order (named after a significant case on the issue), requires some explanation. Deferred sales are usually considered when the parties have minor children and want the children to be able to stay in the family home until a later date. A custodial parent, in these situations, is given exclusive use and possession of the home on a temporary basis so that the kids can stay there.

In determining whether to allow a deferred sale, the family court must first consider whether it is economically feasible to do so. The court must balance the relative hardship of the parent and children staying in the home with the hardship placed upon the parent no longer living there. The law requires that certain factors be considered in making these determinations. It also requires that the deferred sale of home order contain an end date, such as the date the youngest minor child attains the age of majority or graduates from high school.

In addition to the disposition of the home, the family court will have to determine whether one party must reimburse the other for “contributions for the acquisition of property”. These reimbursements may be required if one party made the down payment on the family residence out of separate funds. They may also be required if separate funds are used to pay down the principal on the home.

As you can see, many factors impact how the family residence is handled in a divorce. How these issues are presented can significantly affect your outcome. Judy Burger is experienced in complex property division matters and how to present those in family court. Please contact her today at (415) 259-6636.