Complex Divorces and Tricky Issues

Life may be complicated but laws are simple. Unless you have a prenuptial agreement waiving your rights, the same law applies to everyone. As laws are written for the general public, the trick is how to apply it to your special situation. Here are a few examples:

THE COST OF SUCCESS– What are the key issues?
INTERNATIONAL MARRIAGE– More issues to consider!
DEPARTMENT OF CHILD SUPPORT SERVICES– How to get through to them
CONCLUSION

The Cost of Success

Ann Bishous met Drew Lee Driven in college. They married shortly after graduation and settled in Los Angeles, California. In 16 years, besides having three children, Drew and Ann built a lucrative company together. They purchased many properties in different parts of the U.S. and abroad. And Drew inherited some property from his father. But, their busy life got in the way of their marriage. Drew grew unhappy and began to drink heavily. Then he told Ann he wanted a divorce. While the negotiation was still going, Drew met a young model. Ann objected to her being around the children when they were with Drew.

What are the issues to be considered, negotiated, settled, and tried?

Spousal Support - The idea of spousal support is that the standard of living, after the divorce, should not be drastically reduced for the spouse with less income and less earning capacity. Even though many factors are involved in calculating spousal support, the purpose is that the spouse with less income and less earning capacity should have time to regain his/her footing and become self-sufficient.

Ann wants Drew to pay spousal support because her income is less than Drew's. As it was a marriage of more than 10 years, she also claims life-time spousal support. Drew objected, saying Ann can take care of herself perfectly well without spousal support as she has a college degree and had worked throughout the marriage.

One of the mandatory disclosures during divorce is Income and Expense Declaration. Income is easy to determine if you are an "employee". All you have to do is produce paystubs and W2s. For self-employed people, it's more tricky, but it can be done. We can subpoena your bank records, credit card records, investment records, any and all financial records. The DODGER'S MCCORD DIVORCE had already subpoenaed over 34,000 pages of records just for the first round of discovery. After carefully pouring over them, a financial picture may be constructed, more or less.

Many people overstate their "expenses" thinking it will mean they will get more spousal support and child support. But that's a fallacy. If you declare more expenses than your income, you raise a red flag to alert the opposing counsel and the court. Hmmm…. where is you hidden asset? Do you have income you are not disclosing? Who is paying for those extra expenses, and why?

If you were not employed during the marriage, why not? And what's your current earning capacity if you go back to work? A "Vocational Valuation" may be requested, and paid for, by the parties to establish the current market value and "earning capacity" of the payee spouse. The payer spouse can then request the court to consider it when ordering spousal support and child support.

Even though the law says the court may not use the spousal support calculation based on the DissoMaster, and must consider all the factors listed in Family Code section 4320, most people still abide by the DissoMaster calculation anyway because it avoids the need to go through all the factors one by one and engage in more painful teeth pulling.

Custody - The controlling consideration in any custody hearing is "Best Interest Of the Child". Even though there are three kids in this marriage, as children are individuals, each one's interest must be considered separately. Josh, who is 14, is a high school student and athletic, so what's best for him? Megan, who is 11, is a headstrong girl who tends to get into trouble, so what's best for her? And Joely, who is 6, is a quiet, shy girl; what's in her best interest?

California has a mandatory custody mediation program for all cases involving custody. Because the relationship between Ann and Drew has become hostile, they may request to be interviewed for the mediation separately. When they are unable to agree on a parenting plan, they can request, and pay for, a "custody evaluation" by a private psychologist/therapist. The courts have a list of certified professionals. But parties are free to agree on someone who is not on the list. Custody evaluation can be very expensive and intrusive. Psychological testings and evaluations are often involved. I have never had one that cost less than $12,000 or lasted shorter than six months. So be prepared to pay and to wait. No matter what the report recommends, it is still the party's responsibility to convince the court what's best for each child and why he/she should have custody. If a parent does not agree with the recommendation, he/she can request a hearing and subpoena and challenge the evaluator and summon witnesses to overturn the recommendation. At the end of the day, it is the court order that matters.

Ann's objection to Drew having his young girlfriend over when the children are with him may be a consideration for custody and visitation. She can request that they be shielded from her and that she not be present when the children are with Drew. And, because of Drew's drinking problem, she can also demand that Drew refrain from drinking 24 hours before his custody/visitation time so he is sober to be with them and fully capable to take care of them. And depending on the severity of the drinking, she can also demand random drug/alcohol testing to ensure compliance.

Child Support – Every child is entitled to his "Station in Life" and the best both parents can provide. There are only two factors in considering child support: the parties' gross income and their respective timeshare of the children.

Instead of manually calculating the complex formula set out by the law, everyone in California uses DISSOMASTER. Beside the basic minimum child support calculated automatically by DissoMaster, the payer parent is free to give extra perks to his/her children. Many parents agree to establish college funds for the children, extend the termination date from 18, or high school graduation, to 22, or college graduation, to provide for extra-curricular activities, and other things they believe their children deserve. They are, after all, their children.

Modification

I am continuously surprised that so many people think when the divorce is finalized, everything is over and done. I am of the opinion that, if you have children together, it is never over and done because parents are joined at the hips with their children forever. Life happens and children grow up. As they do, their needs change. So the parents should always keep in mind their right to modify custody and support to make sure the children are adequately taken care of financially and emotionally. Even if there is no "substantial change of circumstances", the children may still be entitled to the Cost Of Living Adjustment every three years.

In fact, if you have lifetime spousal support, it is also never over and done because spousal support is also subject to modification when there is a "substantial change of circumstances".

Business Valuation —-

Ann and Drew started the business together during the marriage. So, the business is automatically community property, unless there is a written agreement otherwise.

Ann claims that she worked hand-in-hand with Drew to build the business together; therefore, she is a 50% owner of the business. As they could no longer work together, Ann wants Drew to buy her out. However, Drew claims Ann was nothing more than a "secretary" who was paid a "salary" so there is no buying out necessary.

On the surface, this may be good for Drew's claim to have the court award the business to him. However, on closer look, we can see that this claim is contradictory to his claim against Ann's spousal support. If Ann is deemed to be half-owner of the business, the business income will be considered part of her income, thus reducing her spousal support. If she is only a secretary for the business, after the divorce, she is not likely to keep her employment there, thus increasing her need for higher spousal support.

Business valuation is an extremely expensive and lengthy process. The expert gets complete access to all your business records and analyzes all the transactions. The minimum charge I know of is $15,000 and most experts are not available for at least five or six months.

If the court deems that Ann is 50% owner, then Drew will have to buy her out if he wants sole ownership and control of the business. However, if the court deems Ann to be an "employee", she still has a community interest in the business. The first step in separating her community interest from his separate business interest is the selection of the Van Camp or Pereira formula. The Van Camp formula is for business that grew due to the rising market. The Pereira formula is for a business that is labor-intensive, and the growth of the business is due to the business owner. If Ann is not part owner, she would get a bigger share from the Van Camp formula than from the Pereira formula.

Property Settlement - California is a community-property state. Everything you purchased during the marriage is community property. Anything you contribute to the community property, unless there is a written agreement otherwise, is a gift to the community property.

Sometimes parties agree to "homestead" the family residence until the youngest child turns 18, or graduates from high school. The family residence will then be sold and profit/expenses divided. However, most of the time, the parties want everything divided, including the family residence.

Ann and Drew have lots of properties all over the world. If they can agree to the fair market value of any property, they can agree to a fair and equitable division. If they cannot agree to the value of some property, they can request, and pay for, an appraisal and divide the value accordingly. Sometimes, each party will order their own appraisal and split the difference. If they cannot agree to the appraised value or the split, the court can order the property sold.

Be aware of refinancing during the marriage. Many lenders automatically add your spouse's name to your premarital separate property if you refinance during the marriage. Then the doctrine of "Title Presumption" kicks in and the property is now community property. Be sure to have a written agreement from your spouse to transfer the property back to you and sign an inter-spousal transfer quit claim deed after the refinance is approved.

Ann inherited some money from her grandmother, which is her separate property, and spent a substantial amount of it on "remodeling" the family residence. As she used her separate property to improve a community property, she is entitled to "reimbursement". There are, of course, formulas for calculating her share of the "reimbursement".

The property Drew inherited from his father is also his separate property. Did he have to pay anything during the marriage to keep and maintain the property? What's the community contribution to the separate property? Again, there are formulas for calculating the community's share of the "reimbursement". The key term to remember is PITI – Principal, Interest, Tax, and Insurance.

Retirement and Investment -

Ann and Drew each set up a 401(k) from the business and opened several investment accounts. As community property, each is entitled to 50% of the accounts. As negotiation goes on, the market values change. Do we use the date of separation, the date of settlement, or the date of trial to establish the value? And should they withdraw their 401(k) monies to buy out each other or should they request, join the administrator of the plan, and obtain a QDRO (Qualified Domestic Relations Order) and delay the withdrawal until retirement? There are many things to negotiate and many issues to work out.

Debt/Obligation Divisions – Every marriage and every business incurs debts and obligations. When we divide properties, we also divide debts and obligations. As we take properties fairly and equitably, we also accept debts and obligations fairly and equitably.

Equalization - When all negotiation is done and a settlement is reached, an Equalization Plan is established to lay out what he takes and what she takes and who owes who how much. Transfers of titles and debts, and payment plans are scheduled accordingly.

Full Disclosure – California requires a minimum of two rounds of disclosure, the preliminary and the final. However, if parties reached an agreement after the preliminary disclosure they can waive the final disclosure. All disclosure must be full and complete, to the best of the party's knowledge, of course.

The 2001 ROSSI CASE is a good illustration. Ms. Rossi took $2 from the community money to buy lottery tickets and won $1,300,000. She then filed for divorce, did not disclose the winning, and had the winning sent to her mother's house. The divorce was finalized. A year later, Mr. Rossi got a letter from the lottery office. He moved to set the divorce judgment aside for fraud. The court found Ms. Rossi's failure to disclose was intentional and willful and therefore violated the full disclosure requirement. The court granted Mr. Rossi his 50% of the winnings as community property and the other 50% of the winnings as "punitive damages" against Ms. Rossi.

Trial – The parties should, by now, have resolved all they can with the help of their attorneys. Any remaining unresolved issues are then submitted to the court for trial. However, if there is no unresolved issue left, the parties can then file for "Uncontested Dissolution" and submit their Marital Settlement Agreement for the court's approval and for the entry of Judgment.

INTERNATIONAL MARRIAGE

Ivana B. Happy is a European damsel. Luke N. Goode is an American guy. They met in Paris, the City of Love, fell in love and got married. A year later, they had a son, John. Then the family moved back to the US and settled in Los Angeles, California. Shortly thereafter, they had a daughter, Marie. But Ivana missed her home and had trouble adjusting to the Los Angeles culture. Three years later, Ivana told Luke she was not happy, she wanted a divorce and wanted to take John and Marie back to Europe with her. Luke objected. He wanted to keep John and Marie here in the US with him.

Can they get a divorce here in Los Angeles if they were married in Paris and Ivana is not a US citizen?

The short answer is YES. However, the petitioner should be Luke, not Ivana. As Luke is an American citizen, has lived in California for more than six months and in Los Angeles more than three months, Los Angeles has jurisdiction. Since Ivana is here in Los Angeles, Luke needs to make sure she is served the papers here in Los Angeles so California can have in personam jurisdiction over her.

Since John was born abroad, is he a US citizen under California's jurisdiction?

All persons born in the US automatically obtain US citizenship. All children born to a US citizen are also US citizens. However, if a child is born abroad, the parents must take certain steps to register the child with a US consulate or embassy. If both parents are US citizens and at least one of them has lived in the US prior to the child's birth, no problem. If only one of the parents is a US citizen, then the citizen must have lived at least five years in the US, and a minimum of two years after he/she is 14, prior to the child's birth.

In this case, John's father, Luke, is a US citizen and had lived in the US until he was 24, when he decided to take a trip to Europe. Since he registered John's birth with the US embassy in Paris , California has jurisdiction over John.

Since Marie was born in Los Angeles, California has jurisdiction over her.

Who should have custody of the children?

At the time Luke filed for divorce, John was five and Marie was three. Should the children stay here with Luke and not see their mother for long periods of time? Or should they go with Ivana and not see their father for long stretches of time? The overriding principle of custody decision is "Best Interest Of The Child". What's best for John and Marie?

California provides "mandatory" custody mediation for all divorces involving children where parents can sit down with a trained, professional custody mediator to work out a parenting plan. If they reach an agreement and sign the said agreement, and do not change their mind within 10 days, it is submitted to the court to be adopted as the court order. If they cannot reach an agreement at the mediation, they can take their time to negotiate on their own or request a custody evaluation. If they still cannot agree, then it is up to the court to decide what's best for the children and order custody and visitation. As a longtime family law judge said, "Take your time, work it out. You know what's best and what works for you and your kids. If you can't, you will not like the decision I make and you will be forced to live with it."

What are the international move-away issues?

Once the court obtains jurisdiction over the children, the children are "wards of the court". No one can remove them out of the jurisdiction without a court order. To do so, the parties have to go back to court to get a "move-away" order. If the non-moving party agrees to the move, no problem, the court will issue the order revising prior custody and visitation arrangement. If the parties can't agree, then there will be litigation.

When a move-away hearing is required, the court conducts the hearing "de novo": not to review and revise the prior order but to start it anew. The same standard of "Best Interest Of The Child" applies. The factors the court must consider include: the age and maturity of the children, the ability of the parents to cooperate and communicate with each other, the financial obstacles for long-distance visitations, feasible continuous contacts available with the non-moving parent, and detrimental effects to the non-moving parent and the children. As there are many complicated issues and intricate private concerns involved, courts always require a "custody and move-away" evaluation first and consider the "recommendations" of the professionals.

For international move aways, there are also special considerations such as cultural conditions and practices of the foreign country, difficulties and expenses of visitations, enforceability of US orders, and potential risk of flight and child concealment. If conditions in the foreign country change and the enforceability of the order becomes questionable, the court has the discretion to reverse and void the move-away order and order the children be returned forthwith. The court may also order a sanction posted by the moving parent to ensure full compliance and enforcement of the order.

A custody order is enforceable in any Hague Convention Child Abduction Act signatory country. If a parent removes a child to any of these countries without a court order, the US parent can initiate a request for the return of the child and seek enforcement in the foreign country. The court does keep this in mind when considering custody and move-away requests. If the foreign county is not a Hague-signatory country, the likelihood of the court granting an international move away is slim to none.

In this case, once Ivana responded to Luke's petition for divorce, the court had jurisdiction over her and she could file for a move-away request. As always, the moving party has the burden of proof, so it is the moving parent's burden to set forth the reasons for moving, and how it is in the children's best interest, and to address the considerations.

How should child support be calculated?

After move-away and custody issues have been resolved, the court will calculate child support as in any domestic case. Even though the children may be removed from California, California remains the "home state" of the children and the court retains jurisdiction, so child support will be calculated on California's standards. As mentioned above, courts do take into consideration travel expenses for visitations and, depending on the financial situation of the parties, may assign travel expenses to one or the other or apportion them to meet the fair and equitable principle to allow maximum visitation.

Child support is always payable on the first and the fifteenth of each month. The payer is to pay in US dollars. The payee then has the option to exchange the funds for local currencies at his/her discretion and timing. If the move-away order is not granted and the children stay in the US, the foreign payer must tender child support payments in US dollars. Many countries have reciprocity agreements with the US so child support orders may be registered and enforced by the resident country of the payer.

Spousal Support

It doesn't matter if Ivana stays in California or moves back to Europe; spousal support is calculated the same way and paid at the same rate and duration as in any domestic divorce. Spousal support is likewise modifiable based on the changed financial circumstances of the parties, provided the change occurs before spousal support terminates.

Property Settlement

Once California has jurisdiction over your divorce, it has jurisdiction over your property, be it community property, quasi-community property, in rem property, and even over separate property. So holdings in foreign countries are not exempt. The same law applies to domestic marriages and international marriages. In short: whatever you acquired together during the marriage is community property; whatever you acquired during the marriage in a non-community property state or country is quasi-community property; whatever property with a title in dispute is in-rem property; and whatever property you acquired before your marriage or inherited is separate property. California is a community-property state. So, unless you can establish separate property by title or by other written agreement, it's divided 50/50. An equalization plan is often constructed to facilitate the new title/ownership of divided property and for the most feasible way to manage and administer the property. As property division is a one-shot deal, unless you can prove fraud, there is no modification. And debts and obligations incurred during the marriage will be resolved the same way as in any domestic divorce.

DEPARTMENT OF CHILD SUPPORT SERVICES

What is CSSD?

The Department of Child Support Services is the second largest government bureaucracy after the IRS. And its reach is just about as invasive. It was originally set up to recover welfare payments from non-custodial parents; thus it is part of Title IV of the Social Security Act, along with Aid to Family with Needy Children. It expanded to establish and enforce any and all child support payments. Then it expanded further to include enforcement of spousal support if child support is also part of the same order. Even though it is a federal agency, it is administered by the state and operated by the county. As it is a federal program, all CSSDs have inter-state and inter-county services so no one is out of reach, theoretically.

CSSD is a three-party litigation system within a single-subject matter court. The three parties are: the payer/obligor, the payee/obligee, and CSSD. So everything is more complicated. The single-subject matter is child support. Since it cannot hear any other matters related to the divorce, not even custody, and since child support is closely related to custody, you often have to go to two different courts. So everything takes a lot longer.

How do I get through to them?

California, being a huge state, naturally is one of the biggest CSSD states. Los Angeles's caseload is bigger than the rest of California's combined. Coupled with the budget crisis of the last 10 years, repeated layoffs, and new furloughs, it is nearly impossible to get through to anyone. Exasperated by the closing of dedicated courts, it is nearly impossible to get anything done. But, have no fear! After a lot of complaints and political pressure, they did set up a dedicated phone line for attorneys. The best way to reach anyone in CSSD is by retaining an attorney to represent you. And the best way to get anything done at CSSD is by having an attorney who knows how to navigate the quicksand. There really is no other way around it.

Why bother with CSSD?

As mentioned above, CSSD was originally a welfare-recovery program. If either parent has ever been on welfare, you are automatically part of the CSSD system. There is no way out until welfare reimbursement is paid in full. Since it has been expended to include any and all child support cases, anyone can open a case and ask for establishment or enforcement or both. However, since no welfare money is involved, the custodial parent may request CSSD to close the non-welfare case.

Slow services and impossibly busy phone lines notwithstanding, CSSD has enormous power and its tentacles reach everywhere. Just to name a few: it automatically charges 10% interest on all arrears, it suspends driver's licenses and business licenses, it intercepts tax returns, it freezes bank accounts and credit cards, it places liens on all the payer's properties, and it can initiate criminal prosecution. Provided that they get to your case, of course.

Why do I need an attorney to help me?

If you don't mind calling dozens of times and getting only a busy signal; if you don't mind being put on hold for an hour after you finally get through; if you don't mind being transferred here and there and getting lost; if you don't mind dealing with your case worker, your case attorney, the duty attorney, the floor attorney, and the court attorney; if you don't mind them not returning your calls or enforcing your case; if you don't mind them overcharging your case; if you don't mind repeating the same process endlessly, then you don't need an attorney because CSSD service is "free". Otherwise, get an attorney and keep your high blood pressure under control.

I worked as a top manager for several CSSD programs after I earned my MBA and participated for many years on the California Family Support Council working closely with the legislature and other government agencies passing child support laws, enforcing regulations, and increasing collections. I also helped created several PC266 criminal prosecution units to improve enforcement. After I became an attorney, I served as a CSSD attorney and special prosecutor. Even though much has changed for the worse in recent years because of the increase in caseloads and decrease in resources, the complex procedure mostly remained intact. And I still know many of the people there and know how to work with them.

CONCLUSION

When you have a toothache, don't pull the tooth out yourself, and don't ask your neighbor or your cousin to pull it out for you; go see a dentist. When you have to have major surgery, don't try to do it yourself or ask a friend to do it for you; go see a doctor. Divorce is major surgery, as painful as pulling teeth. So don't do it without anesthesia or without professional help. SEEK EXPERT HELP EARLY! As the saying goes, "Do it right, do it once. Do it wrong, do it over and over again until you get it right." A good attorney will guide you through the process and shield you from all sorts of aggravations. IT WILL BE MONEY WELL SPENT!

Contact My Office

To set up an appointment for an initial consultation, contact my office or call me at 310-598-7375. I am available to meet with clients Monday through Friday, from 9 a.m. until 5 p.m. My office is located behind Westfield Shopping Town, in Century City. I accept Visa and MasterCard.