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San Jose Divorce Lawyers Blog

Retirement Accounts as Marital Assets

One common mistake people make during a San Jose divorce is failing to consider how divorce will affect their retirement.

A recent Securian Financial Group survey of over 500 divorcing couples who were married for ten years or more found that 31% did not claim a share of their spouse’s retirement benefits because they weren’t aware that they were entitled to a portion of these marital assets. Among those surveyed after the divorce, 25% said they wished they had known more about how to divide retirement benefits.

In California, retirement assets accumulated during marriage are considered community property that belongs to both spouses. This is true even if one spouse only works outside the home part time or not at all. However, any retirement assets accumulated before marriage belong solely to the person who earned them. This means it’s possible for a retirement account to have funds that are classified as both separate and marital assets.

If you are the lower earning spouse and have minimal retirement funds in your own name, you should prioritize retirement over all other marital assets. In the long term, retirement assets are more beneficial than taxable alimony payments or gaining possession of a house that you will struggle to maintain on your own.

Retirement assets are divided with what is known as a Qualified Domestic Relations Order (QDRO). A QDRO is a legal document that protects both of you from owing taxes when funds are transferred from one party to the other.

By law, you are allowed to withdraw money from your former spouse’s 401(k) or 403(b) plan one time without incurring the 10% early withdrawal tax penalty for people under age 59 ½. Most financial planners recommend not taking advantage of this perk, however, since allowing the money to continue to grow tax-deferred is the best way to ensure a secure retirement.

Your San Jose divorce attorney can answer general questions regarding how retirement assets are divided, but hiring a financial planner is strongly recommended. A skilled financial planner can provide you with specific advice regarding how to create a secure post-divorce financial future.

Hiring a Child Support Attorney to Handle Your Case

San Jose child support is automatically set as part of your of your divorce settlement, but you may need to go back to court at a later date to ask for a modification or to seek assistance in collecting payments that are overdue. If this happens, hiring an experienced child support attorney can make it easier to navigate the state’s family court system.

A child support attorney can help with issues such as:

  • Collecting overdue child support
  • What to do if you think your spouse is lying about his/her income
  • How to collect child support from a self-employed parent
  • Asking for an increase in child support because of a change in the child’s needs or living expenses
  • Extending child support payments for a special needs child who is unable to live independently
  • Requesting a reduction in child support due to financial hardship
  • Requesting a reduction in child support due to a change in custody arrangements
  • Understanding how remarriage or the birth of an additional child may affect a child support order
  • Requesting the use of imputed income to determine child support for a parent who refuses to find employment

Our article Questions for Your Child Support Attorney provides additional information regarding some of the issues that a child support attorney can help with.

Questions to Ask When Interviewing Your Attorney

Basic questions to ask before hiring any San Jose child support attorney include:

  • Do you specialize in family law?
  • How many years have you been practicing?
  • Will you personally be handling my case? If so, do you have time in your schedule to give it your full attention?
  • What do you see as your ultimate goal in handling my case? Are there any specific legal challenges I should be aware of?
  • Do you have a list of former clients who can provide testimonials regarding your services?
  • Do you work on a retainer?
  • Is there an hourly rate in addition to the retainer?
  • What hourly rate is charged if I speak to your secretaries, paralegals, or other staff members?
  • Can you estimate the total cost of your services upfront?
  • What factors could potentially influence that estimate?

 

Extended Summer Visits Don’t Permit a “Break” in Child Support

After a Santa Clara County divorce, it’s common for the noncustodial parent to enjoy an extended summer visitation with his or her child. Visits of two to eight weeks allow for activities that would not be possible during the school year. Since child support is based in part on how often the child is physically in each parent’s care, many people find themselves wondering if paying child support is necessary during the extended summer visit.

You might feel like you deserve a break from child support payments if you’re currently paying for your child’s food, shelter, clothing, and travel expenses, but it would be a serious mistake to stop making your regular child support payments during your summer visitation with your child. Even if you are keeping your son or daughter for several weeks at a time, you still must make all court-ordered support payments. Child support is based on custody and visitation schedules for the entire year, not just a temporary change in circumstances. Your scheduled summer visitation has already been taken into account when calculating your support payment.

If you stop making child support payments during an extended summer visit, you risk being placed in arrears. This could result in fines, a driver’s license suspension, the withholding of your passport, or even jail time. Interest on unpaid child support continues to accumulate over time, so you will eventually end up paying much more than you would have if you had simply made the original requested payment.

However, if you and your ex mutually decide that a permanent change in custody or visitation is in order, you should speak to an attorney to see if this will affect your child support. Depending on the disparity in your incomes, having your child physically in your care for an extra day or two each week may result in a lower child support payment. Unfortunately, since the court does not periodically reevaluate child support orders, the only way to know if you’re paying the correct amount of support is to ask an experienced San Jose child support attorney.

Understanding How Community Property Laws Affect Division of Property During a Divorce

San Jose family law attorneys say property division concerns are common when a couple files for divorce. Most states follow the equitable distribution system of dividing marital assets, but California is a community property state. In the United States, community property states include: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In California, each spouse will generally own a fifty percent interest in any asset (and owe 50% of any debt) classified as community property. This includes real estate, vehicles, home furnishings, money in checking or savings accounts, and investments. Community property is sometimes called marital property because it belongs to both spouses equally — even if one person did not work outside the home or earned much less than the other throughout the marriage. Marriage is treated much the same as a general partnership, for financial purposes.

Generally, items acquired and/or debts incurred during the marriage will be community property. If a valid prenuptial agreement were executed before the marriage it could change this general presumption. Items that are separate property include assets acquired before the marriage, items received as gifts for one party only, or inherited assets. Having the written records showing where an item of property came from can be important. Please keep in mind that wedding and engagement rings are presumed to be gifts to one spouse only and are thus usually separate property under California law.

When negotiating your divorce settlement, you should understand that a Court will be required to divide the community estate equally. Usually parties will agree to a division that is approximately equal, but they are not required to do so. When negotiating you may need to forfeit interest in some marital assets if there are specific items that you want to keep in your possession. If there are items you feel strongly about keeping, it’s helpful to make a list of equivalent assets that you are willing to part with before the negotiation process begins.

You will need to disclose the assets and debts you know about to the other party. If the value of an asset is not easily determined, or you disagree with your spouse about the value of an asset, experts may need to be brought in for appraisals. Business assets are the most common assets in need of appraisal, but expert assistance may also be required to determine the value of real estate, antiques, or collectibles. Pensions and other retirement holdings should also be looked at carefully, and will often need to be divided by a expert.

A Judge will only get involved in the division of marital property if you and your spouse can’t come to an agreement on your own. You are advised to consider the cost of litigation versus the potential benefit of being awarded specific marital assets.

The same principles that apply to the division of assets also apply to the division of marital debt in a community property state. Your San Jose divorce attorney can explain this issue in greater detail. You can also refer to our discussion of property division for additional information.

Determining Your Date of Separation

For many couples seeking a Santa Clara County divorce, determining the date of separation will be fairly straightforward. However, if you’ve been living apart from your spouse for several months before you decided to file for divorce or you were unable to move out of the home you shared due to financial concerns, there will probably be disagreement as to when your separation officially occurred.

If you’ve been living apart, the Court will ask when one of you intended to end the marriage. Intention is crucial because couples sometimes live apart for work-related reasons even though they intend to stay legally married. To determine the date of separation, the Court may look at evidence of living as a single person would. This might include going long periods of time without contacting each other or starting a relationship with another party.

If you are still living under the same roof, there would need to be evidence of unambiguous conduct amounting to a physical separation. For example, the date at which one of you moved all of your belongings into the guest room after publicly announcing your plan to divorce may qualify as the date of separation, although there is case law that says that this would not be enough.

The overwhelming majority of the time the date of separation has serious consequences effecting the division of marital property, and as a result of this substantial effect it is very common for people to stretch the truth — really hard — to try and make the date of separation that they want for financial reasons somehow fit the facts. The issue of the date of separation is litigated with great frequency. Generally, assets acquired and/or debts accrued after the date of separation are considered separate property, while those same assets and/or debts, if acquired/accrued before the date of separation, will be community property. Community property is generally split 50/50, but separate property is not. A recurring theme in Santa Clara County divorces is the spouse who went on a large shopping spree around the time they or you asked for a divorce.

If unvested stock options are an asset in your case the date of separation will have a huge impact, but the determination will also depend on which formula is used by the Court. If you have these more complicated type issues to deal with it is highly advisable that you consult a good Family Law attorney.

If your spouse is pressuring you to agree to a date of separation that you feel is inaccurate, it is best to contact an experienced San Jose divorce lawyer before you proceed. You do not want to inadvertently agree to a date of separation that will result in a less favorable settlement.

How Is Child Custody Determined?

Determining child custody arrangements can be one of the most challenging parts of a San Jose divorce.

Joint Legal Custody means that the parents share the decision making authority regarding things like choosing which school and/or doctor the children will go to, and both parents have the right to see the children’s grades. Usually the timeshare between parties who share Joint Legal or Joint Physical Custody will be close to 50/50, but that is not legally required in California. A parent with Sole Legal Custody will be able to make many decisions effecting the children without being required to ask the permission of the other parent.

California Courts presume it is in the best interests of the children to have frequent and continuing contact with both parents. It is believed that children do best when they are allowed to develop a loving relationship with both parents. However, Sole Custody could be granted if both parents agree to the arrangement or there are other factors that indicated Joint Custody is not in the child’s best interests.

Children over the age of fourteen may testify regarding their child custody preference, but the Judge is not legally obligated to honor the child’s wishes. The Judge will not abide by the child’s wishes if there is evidence the child has been manipulated by one parent or that the child’s preference is based on a desire to avoid the rules, discipline, and structure that are necessary in a safe and loving home.

If one of the parents has a history of Domestic Violence against the child’s other parent, the court will tend to rule against granting custody to that parent unless the parent has completed a batterer’s treatment class and/or a parenting class and there have been no further acts of violence committed.

The Court has the authority to order a test for illegal drug use prior to making a custody determination. A positive test won’t automatically disqualify a parent from obtaining custody, but it will be considered as evidence along with other factors that illustrate the parent’s character and commitment to the child.

In rare cases, custody may be granted to a third party if it is determined that neither parent is a suitable guardian. This is most often associated with cases in which there is evidence of parental drug abuse, mental illness, or a history of child neglect. Third party guardians are most often a grandparent, aunt, or uncle.

It is best to contact an experienced child custody attorney in San Jose for assistance if you have concerns about a custody-related issue.

New Study Reports Shared Custody Is on the Rise

At one point, judges routinely assumed that children belonged with their mothers after a Santa Clara County divorce. Now, however, shared custody is on the rise across the nation.

A recent study in Demography by Maria Cancian and colleagues from the University of Wisconsin–Madison reports that cases in which the mother is awarded sole custody are down from 80% in 1986 to 42% in 2008. Equal shared custody arrangements increased from 5% to 27% within this time period. Unequal shared custody arrangements increased from 3% to 18%. The study was based on 9,873 divorce cases documented in Wisconsin Court Records from 1986 to 2008, but presumably similar results would be found in other states. In the 1980′s three studies suggested that in California custody sharing was already higher than in Wisconsin.

Fathers who want to remain active parents after their divorce should seek the assistance of an attorney experienced in advocating for father’s rights. There is no good reason why a loving and committed father should be denied shared custody of his children.

If you are seeking shared custody, one important factor to consider is how you will handle child care. Traditionally, women were seen as the more suitable choice for custody because they were more likely to be full-time homemakers or only work on a part-time basis. If you work full-time, your challenge will be to show the court that you have a suitable child care plan in place. This could include adjusting your work schedule to reduce business trips or overtime requirements, enlisting the assistance of your child’s grandparents when you must work late, or hiring a part-time nanny. If your actions show that your children are a priority in your life, the demands of your job should not be held against you.

Although it can be frustrating when your ex appears to be thwarting your efforts to be an involved parent, it’s in your best interests to keep your temper in check. Parents who can prove that they are willing to work together for the good of their children obtain more favorable custody outcomes. Never badmouth your ex in front of the children or on social media posts that may end up being used as evidence against you. If your ex is refusing to cooperate with your efforts to see your children, document all failed visitation attempts and discuss the next step with your San Jose divorce attorney.

Help with a Child’s College Expenses Post Divorce

California does not legally require parents to help with a child’s college education after a divorce in San Jose, although you do have the option of adding required support into your divorce settlement. The court will enforce the agreement between you and your ex as long as each person is still reasonably able to pay.

When a child applies for federal financial aid for college, the Free Application for Federal Student Aid (FAFSA) is used to determine eligibility for grants, student loans, and scholarships with a need-based component. The FAFSA should be completed using the information of the parent the child lived with for the majority of the previous twelve months. If the parents have joint custody, the child should provide information for the parent who provided the majority of financial support. The rules regarding which parent’s income must be reported are the same even if the parent in question does not plan to help pay for college expenses.

Stepparent income needs to be reported if the custodial parent has remarried. This is required even if the parents have a prenuptial agreement that says the stepparent will not be helping to pay for the child’s college.

If the child is planning to attend a private college, the college may require its own financial aid documentation from the noncustodial parent. This would be used to determine eligibility for school-sponsored aid only.

Knowingly using the wrong parent’s income and asset information to obtain a more generous financial aid package for a child is fraud. Colleges are allowed to ask for copies of your divorce decree or documents that verify the child’s living arrangements and the payment of child support. Cases of suspected fraud are referred to the Office of the Inspector General at the U.S. Department of Education and may be subjected to fines of up to $20,000 and imprisonment of up to five years.

If you are concerned about paying for your child’s college education, it is best to discuss this issue with your San Jose divorce attorney to see if your settlement will require both parents to share responsibility for tuition and living expenses. Your divorce attorney will not take any responsibility for Federal Law and/or any changes in Federal Law relating to financial aid, so be prepared.

Claiming Social Security Spousal Benefits After a Divorce

If you were a homemaker or earned substantially less than your spouse during your marriage, it’s important to consider that you may still be entitled to Social Security spousal benefits after your Santa Clara divorce. Divorced spouse benefits can provide a valuable retirement asset, but you only qualify if you meet all four of the following criteria:

  • Your marriage lasted at least ten years.
  • You are not currently married.
  • Both you and your ex-spouse are at least 62 years old.
  • You are not entitled to a higher Social Security benefit based on your own earning history.

If you meet the criteria lists above, you have the same basic rights as if you were claiming an ordinary spousal share of Social Security benefits. While your ex is still living, you’re entitled to up to 50% of his or her monthly benefit amount. If your ex passes away, you’re able to assume the survivor’s benefit of up to 100% of his or her monthly benefit amount.

You can receive benefits as a divorced spouse even if your ex has currently remarried. However, you can’t receive benefits based on an ex’s earnings if you have remarried. If your second marriage ends through divorce, death, or annulment, you would once again be eligible to receive divorced spouse benefits. Claiming a divorced spouse’s benefit has no effect on the level of benefits your ex will receive or the benefits his new family would be eligible to receive.

If your ex-spouse is younger than you, it is possible to collect your own benefit first and then switch to the higher divorced spousal benefit once your ex reaches age 62. You are not able to collect divorced spouse benefits until your ex is at least 62 years old.

If you know your ex’s date of birth and an estimate of his or her earnings, you can use an online Social Security calculator to determine if your divorced spousal benefit is higher or lower than the benefit based on your own earnings. Unfortunately, you can’t simply call the Social Security office to ask for this information.

I can be important that you check into this issue, as a standard boilerplate type clause included in many Marital Settlement Agreements can take this option away. Your ex spouse’s new spouse may prefer that you lose this option, as he/she may then be entitled to receive more. You should let your attorney know if you think this might be an issue.

An experienced San Jose divorce attorney can answer questions that you might have about the division of retirement assets during your divorce. However, you may also want to consider speaking to a financial planner to obtain more detailed information about how ending your marriage will affect your retirement plans.

Affordable Care Act Makes It Easier to Obtain Health Insurance After Divorce

For many couples contemplating a Santa Clara divorce, maintaining health insurance is a legitimate concern. If you suffer from diabetes, high blood pressure, or another chronic condition requiring regular prescription medication and doctors visits, these expenses can quickly take a big chunk out of your monthly budget. The passage of the Affordable Care Act has changed the rules and changed who the winners and losers will be on these health insurance issues.

The law does not allow you to remain on a spouse’s employer-provided coverage after a divorce, although your children can still obtain health insurance in this way. You are eligible for COBRA coverage to provide temporary insurance while you look for a more suitable permanent solution.

The Affordable Care Act sometimes benefits people who are losing access to a spouse’s employer-provided coverage in several ways. First, it prohibits denying coverage based on a preexisting condition. This means even people in less than perfect health can still obtain coverage from a private policy. The law also provides subsidies to help you buy coverage if your income is under a certain level and you don’t have access to suitable employer-provided coverage. These benefits, of course, come at the direct cost that if you are healthy and have no pre-existing conditions your rates went up, a lot, to cover the actuarial cost of covering all the high risk insureds; thus, the sick benefit and the healthy pay up.

The marketplace is particularly important for women, since women are more likely to be employed part time or work for small employers that do not provide insurance coverage. A study from the University of Michigan found that 115,000 women across the United States lose their health insurance each year due to divorce.

California is one of the states that has chosen to expand Medicaid coverage under the Affordable Care Act. Medicaid coverage was expanded to include low income adults as of January 1, 2014. Coverage is available for adults with incomes that are 133% or less of the Federal Poverty Level. However, the income guideline for pregnant women provides coverage when income is 208% or less of the Federal Poverty Level.

Medicare coverage remains an option for people over age 65 or those who meet certain disability criteria. Your San Jose divorce attorney can provide additional guidance if you aren’t sure how your need for health insurance coverage will affect your settlement.