Joyce, a successful singer/songwriter, recently married her high school sweetheart. Aspiring novelist Kristen and her agent have been married for eight years. And Jack has spent countless hours in his garage workshop honing his creations hoping for a big payoff someday with the help of his wife of eleven years. Each of these people may find themselves facing a tricky issue if they decide to divorce – what to do with the royalties earned from their creative works or inventions.
California is one of nine states that use community property as the basis for property division. This means that property and debts obtained during a marriage are presumed to be owned 50/50. Splitting a bank account between two people is fairly easy. However, dividing less tangible assets – like royalties – typically is more difficult.
A royalty is a sum of money paid to another person in exchange for using their property. Royalties may be paid to use someone’s:
An item that generates royalties is an asset, as is the income generated. In fact, royalties typically are reported as business income.
Property division can be a major part of a divorce case. A couple’s assets generally are separate property, community property, or commingled. How royalties are split may depend on when a royalty-producing work was:
Generally, work product or inventions created or developed during a marriage are community property. If the work was done prior to the marriage, but the spouse contributed to its success in some way, royalties could be split. Finally, an invention created during a marriage but not patented until after the marriage may still generate income for the ex-spouse.
A divorcing couple can certainly address royalty issues when negotiating their marital settlement:
Complicated divorces involving royalty-producing assets typically involve more than state divorce laws.
They are an undeniably important asset and a potential source of income. The spouse who produces the intellectual property or work of art may want to keep all the royalties. However, that person’s spouse may be entitled to a percentage.
Judy Burger is a California Certified Family Law Specialist, and founder of the Law Offices of Judy L. Burger. She uses her extensive experience with business-related valuations to help clients with business and royalty properties. Please call our offices at 415-293-8314 to set up an appointment with one of our attorneys. We assist clients along the Northern to Central California Coast.
California is a community property state. Everyone says that, but what does it really mean? The following questions tackle a few of the questions you may have about community property.
Divorcing couples negotiate an agreement called a divorce settlement. The division of the community estate is decided by the couple and their attorneys. Couples may agree to split that is not 50/50.
However, when couples are unable to agree, then the court gets involved. To arrive at a fairly equal division of assets and debts, courts may award part of the community property to one party based on economic circumstances. And, remember that income is considered community property in California.
Property that is inherited by one spouse usually remains the separate property of that spouse unless one of the following two conditions occurs:
Commingling. The nature of an inheritance changes if the receiving spouse mixes, or commingles, the inheritance with community property.
For example, if Rosie keeps the $120,000 cash she received from her grandmother’s estate in an account that only she owns, her husband John generally can’t take it in the divorce. If Rosie instead deposits the cash into the joint account she has with John, the inheritance is now community property.
Transmutation. This occurs when the spouse who received the inheritance takes action that shows an intent to make the inheritance community property.
Using the example above, Rosie receives the $120,000 inheritance and puts it in a separate account. However, she later uses the money to buy a home that she titles in both her and her spouse’s names. She has transmuted the inheritance from separate property to community property.
A spouse who has commingled or transmuted separate property can request reimbursement if the separate property contribution can be traced back to its source. Rosie could ask to have her $120,000 returned, but she would have to prove that the money came from her inheritance. Keeping accurate, up-to-date records is critical.
Debts incurred during a marriage are typically community debts.
For example, John uses his credit card to buy a wardrobe full of Louis Vuitton while still married to Rosie. His credit card bills are considered community debt and will have an impact on the value of the community estate. When dividing up their assets and debts, John could take the Louis Vuitton and the debt. However, creditors don’t really care about divorce settlements and may come after Rosie for payment if John defaults.
When spouses buy a house together using community funds, the house is community property. A house purchased by one spouse before the marriage is the separate property of that spouse.
However, the issue can become complicated if community funds were used for the mortgage or other house-related expenses. Also, the spouse may be found to have an interest in the home if the couple was married for a long period of time.
It’s not always easy to understand which assets are considered community property and which ones are not. An experienced California divorce attorney can help you understand how much financial information needs to be disclosed.
Judy Burger is a California Certified Family Law Specialist, and founder of the Law Offices of Judy L. Burger. Please call our offices at 415-293-8314 to set up an appointment with one of our attorneys. We assist clients along the Northern to Central California Coast.
In some divorces or legal separations, one of the foremost concerns is what will happen to family pets. Many of us treat pets like family. We may even ask for “custody” of them. But the California courts treat pets as personal property, not like children. Therefore, no one can obtain “custody” of a family pet.
Perhaps the clearest way to deal with pet “custody” issues is to avoid them in the first place. Before you are married, include post-marital pet issues in a valid prenuptial agreement. In such an agreement, you can deal with how you want your personal property to be split; this can include the treatment of pets.
If you didn’t have the foresight to include pets in a prenuptial agreement, all is not lost. In most circumstances, it is best to cooperate with your soon-to-be-ex. If your pet is important to you, you may wish to compromise on other issues in order to obtain possession of your animal. The two of you may even agree to an informal arrangement for where the pet will live, or even for visitation.
Under normal circumstances, it is best to agree on the arrangement for the family pet. However, if the parties cannot agree, the judge will decide who receives the pet. Here are some likely considerations:
This last factor can be particularly important because California has a statute designed to protect pets. California Family Code § 6320, which became effective in 2014, allows courts to take actions to protect personal property from destruction. If a party can show “good cause,” a court can do two things: (1) grant the exclusive “care, possession, or control” of a pet to the appropriate party; and (2) order a party “to stay away from the animal and forbid” the taking or disposal of the animal.
At the Law Offices of Judy L. Burger, we understand how important family pets are not only to a couple but to their children. Pets can provide stability and love in a time of instability. Make the call today to learn how our attorneys can advocate for you: (415) 293-8314.
