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San Jose Divorce Lawyers Blog

Will Your Prenup Hold Up in Court?

 

If you are seeking a California divorce, keep in mind that your prenuptial agreement might not hold up in court. Santa Clara County family law attorneys say there are several different reasons why the state might choose to throw out your prenup.

  • Failure to Disclose Assets.

    A prenup can be thrown out is if it is found to be fraudulent. For a prenup to be legally valid, both parties need to make a full disclosure of their assets, or make an informed and written waiver of that full disclosure. It is a basic principle of California contract law that if you do not know what you are giving up then an agreement stating that you gave it up could be thrown out by the Court. If you or your spouse omitted assets or failed to disclose them all together, this could cause your prenup to be thrown out.

  • Signed Under Coercion or Diminished Mental Capacity.

    Both parties must sign a prenup of their own free will. If one person can prove that the prenup was signed under coercion or if one party lacked the mental capacity to understand the provisions of the prenup, a Judge can throw out the agreement. Threats to call off the wedding if one person did not sign the prenup should not, by themselves, count as the sort of coercion that could void the prenup, as that is the essence of the deal; however, when combined with expensive wedding plans and the social pressure of having a long planned wedding called off, might be enough to undo the written prenup. In California, if the prenup is first presented less than seven (7) days before the wedding it is presumed that a form of Undue Influence and/or Coercion tainted the agreement and it can be voided for being sprung on the other party too close to the wedding date.  Being under the influence of drugs or alcohol at the time the agreement was signed could qualify as having diminished mental capacity, but being hopelessly blinded by love probably would not.

  • No Legal Representation.

    Both parties need to have legal representation when preparing and signing a prenup.  When there are attorney signatures for both parties on the written prenup a Court will presume that the parties had an understanding of the law, and that the prenup was explained to them.  Without an attorney on each side there is a real risk that the Court could find all kinds of problems with the prenup (Lack of Understanding, Lack of Capacity, Undue Influence, Duress, etc.)  Since the reason for a prenup is to be sure what will happen with your property & debts, inserting all the uncertainty over whether the prenup might get thrown out by the Court makes no sense.  One attorney can’t represent both parties when negotiating the terms of a prenup, because the two parties interests are directly in conflict.

  • Contains Inappropriate Provisions.

    A prenup that contains unusual provisions outside the scope of the distribution of assets and/or spousal support could be successfully challenged in Court. Courts have thrown out prenups that contained guidelines about visits by in-laws, frequency of sexual relations, or limits of acceptable weight gain. While a properly drafted prenup could possibly bargain away numerous unusual matters, a prenup is a contract, and as such the entire body of California contract law will apply, including numerous public policies and legal principles (for example, a contract limiting a persons ability to work is generally disfavored, so a prenup promising that wife will quit her job and devote all her time to husband will need to be carefully drafted).  A prenup limiting child support will be presumed invalid, since neither party is allowed to forfeit or restrict a minor child’s right to financial support from a non-custodial parent.  Whether having one invalid clause on a prenup will cause the whole thing to be thrown out will usually depend on how well it is all drafted, so it is advisable that you seek a good prenup attorney who knows how to draft anything creative you may want to do.

If you have questions about the validity of your prenuptial agreement, it is best to seek the assistance of a qualified family law attorney in San Jose who can offer advice that is specific to your case.

 

Don’t Forget to Update Your Estate Plan After Your Divorce

After a Santa Clara divorce, it’s crucial that you take the time to update your estate plan. If you don’t revise your will, trust, and beneficiary designations, you risk accidentally leaving your ex with an inheritance.

The first step in creating a new estate plan is to revoke your old will. Simply tearing up the physical document is the best way to accomplish this task. Your new will should list a beneficiary, as well as an alternative choice if your initial beneficiary does not outlive you. You should also list a new executor and an alternate to handle the details of your estate after your passing.

When in the process of revising your estate plan, keep in mind that many assets pass on outside of the provisions of a will. Life insurance policies, retirement accounts, transfer-on-death brokerage accounts, and pay-on-death bank accounts all have separate policies for listing a beneficiary. Records for each of these assets should be updated individually to reflect your new preferences. Do not make the mistake of assuming that the terms of your divorce decree will take care of this task for you.

If you’re a parent, custody of your children would go to your ex unless there is a reason he or she is unfit to be their legal guardian. If you believe that your children would best be served by remaining in the custody of someone else, you can name a guardian in your will and write a letter explaining why you feel this is the best choice. There is no guarantee the judge will abide by your wishes, but this will at least provide a reason to think twice about granting custody to your ex.

Finally, you will need to choose a person to have power of attorney over your affairs. You will need to choose one person to have power of attorney for healthcare concerns and one to have power of attorney to make decisions about your financial well being. Power of attorney can be extremely important if you are ever mentally or physically incapacitated and need a trustworthy person to act on your behalf.

Working with an experienced Santa Clara family law lawyer is the best way to make sure you have a properly prepared estate plan that reflects your current life circumstances.

Requesting a Vocational Examination

The primary purpose of alimony is to allow the lesser earning spouse to get back on his or her feet after a San Jose divorce. The payments provide the support he or she needs to establish a household, go back to school, and/or secure employment. If your ex appears to be making no effort to become financially independent, it’s understandable to be frustrated.

You have the right to request a vocational examination if you believe that your ex is not working to capacity. This exam is conducted by a trained professional who has at least master’s level training and is certified with the American Board of Vocational Experts (ABVE). The examiner is a neutral third party with the sole purpose of evaluating your ex’s earning capacity. The examiner does not guarantee an outcome that coincides with your desire to pay less alimony.

If your spouse won’t voluntarily agree to a vocational examination, you can file a motion with the court to request that he or she be forced to comply. In most cases, this motion will be granted.

In a vocational examination, the examiner evaluates your ex’s past work history, education, current health, and the job market to determine if it would be possible for him or her to find suitable paid employment. The process generally requires two or three meetings, but may take longer if there are special circumstances.

Technically, the court can’t force your spouse to go back to work. However, if the examiner finds that your ex has the education and skills necessary to work, imputed income can be used to calculate alimony. This means that the court will use a fictitious income number based on an estimate of what your ex could reasonably expect to earn in the workforce. This will either reduce or eliminate the need for alimony, depending on how high the income is.

An experienced San Jose family law attorney can provide additional information regarding the role of the vocational examination in alimony cases.

How to Request a Child Support Modification

Child support payments set after a San Jose divorce are not automatically reviewed to ensure that they are set at the guideline level. Courts in California calculate child support using a complex mathematical formula, and the indicated child support changes whenever either parties income changes and/or the amount of time spent with the child changes. Payments can be increased or decreased if one parent initiates a motion to change (modify) the child support order. If the parties agree to change the monthly amount of the order, but they do not tell the court or file anything, then the order has not actually been changed and there could be a problem in the future.

Modifications to child support orders can be either temporary or permanent. Temporary orders have an expiration date. Permanent orders are ongoing unless you go to court to have them modified once more.

If you and your ex can agree on a modification of child support, you can simply have the judge approve the amount you’ve decided on. Getting a judge’s approval shouldn’t be a problem unless your proposed amount is significantly below state guidelines for minimum support payments.

If you and your ex can’t agree on a modification, you need to request a court hearing. You can do this by filing a Request for Order (Form FL-300) and Income and Expense Declaration (Form FL-150) or a Financial Statement (Simplified) (Form FL-155) with the court clerk’s office. If the reason for the modification needs explaining you may also want to file a Declaration (MC-030) explaining things.  At the hearing, each of you will have a chance to present your case in regards to what child support payment amount you think is appropriate.

The child support laws contain many exceptions and areas of complexity, so it is highly recommended that you enlist the services of a skilled San Jose child support attorney to assist you with your modification request. An attorney can make sure your paperwork is completed properly, discuss the types of evidence you need to gather up for the hearing, and help suggest strategies that will increase your odds of obtaining a favorable outcome.

Collecting Child Support from a Self-Employed Non-Custodial Parent

Before your divorce in San Jose is finalized, child support payments will be determined based on the income and custodial timeshare of each parent.

The easiest way to ensure that you receive the child support payments you are entitled to as a custodial parent is to have them taken out of the non-custodial parent’s paycheck. Wage garnishment is the most common method of child support collection in the United States, but it only works if your ex is employed at a traditional job that receives a W-2.

Self-employed individuals can’t have their child support payments taken from their paychecks, but there are other steps you can take to increase your odds of getting the money that you are owed. The court can order a bank attachment, which means that support payments will be taken directly from your ex’s bank account. It is also possible to get liens placed on property or real estate that your ex owns. Tax refunds can be seized for payment of overdue child support, although many self-employed people don’t receive refunds due to miscalculating how much they need to pay in quarterly estimated taxes.

If you are not having any luck getting your local child support enforcement agency to assist you in collecting the funds that you are owed, it may be in your best interests to hire a private child support attorney. Private agencies are often successful in collecting when others have failed and there is no statue of limitations on the collection of child support arrears.

If you believe that your ex is under-reporting his/her child support income, your San Jose child support attorney might suggest hiring a forensic accountant. This can help uncover improper deductions that may be taking away from the support your child is entitled to receive, such as trips that are being written off as business expenses when they are primarily for personal pleasure or excessive home office deductions.

Who Gets to Keep the House?

For many couples seeking a Santa Clara County divorce, the marital home is their single largest asset. It’s natural to want to know Who Gets to Keep the House, and how its equity will be divided. Of course, your home may also have great sentimental value.

The marital home is not necessarily entirely community property under California law. If you’re living in property that was purchased by one spouse before marriage, property that is mentioned in a valid prenuptial agreement, or property that was given to one spouse as an inheritance, the home may be separate property. Still, if either spouse contributed money earned during the marriage to help make mortgage payments, pay land taxes, or make home improvements, he or she could argue that a portion of the house constitutes community property, unless a valid prenuptial agreement states otherwise. The community interest when only one spouse’s name is on the Deed is regularly calculated using the Moore/Marsden formula.

If the house is determined to be community property and the couple has children together, the parent who retains primary custody of the children could be awarded temporary possession of the house in order to make sure the children are able to maintain some sense of stability in their lives. If there aren’t enough assets available to give the custodial parent the home outright, the Court may make a deferred sale of home order that says the custodial parent has the right to live in the home until the children are grown, and/or some other date. Then, the home would need to be sold, and the debt owed to the non-custodial parent would need to be paid from the proceeds.

If there are no children involved, spouses can choose to sell the house and split the proceeds or have one spouse buy out the other’s interest in the property. The Court will generally not force a specific buy out amount, but can force a sale. If one spouse keeps the home, it is important to consider whether the spouse who keeps the home can afford to do so on one income. Taking on too much to keep the house can lead to a default. Often the existing mortgage will be both parties’ names, and a default by one spouse will hurt the credit of both spouses. Remember, if you and your spouse purchased the home while you were both working, trying to make mortgage payments while paying for insurance, taxes, and necessary maintenance on a single salary could prove difficult.

Your Bay Area divorce attorney can provide additional assistance if you have questions about how your home and other marital property will be divided during your divorce.

How to Ask for Spousal Support

You can ask for a spousal support order at the time you file your divorce papers with the Santa Clara County family court. If needed, the Judge can order temporary support so you will have money to pay your expenses while the terms of your settlement are being negotiated and/or your case is being litigated.

The purpose of temporary spousal support is to provide a necessary amount of support during the divorce proceeding. The Court will decide how much is necessary, but will generally refer to a guideline formula. Spousal support after the Judgment is generally called permanent support, and numerous statutory factors will be considered when setting that permanent support amount. The marital standard of living will be one of the factors considered. You can still request spousal support even if you’re the one who filed for divorce. A Judge can deny a request for spousal support based upon proof of Domestic Violence against a spouse.

If your marriage lasted less than 10 years, the Judge will typically expect you to become self supporting within a period of time that is one half the length of your marriage, or less. Clear evidence that you are unwilling to seek work can result in an Order that you go out and apply to five or more jobs a week, the imputation of income to you reducing the spousal support, and can also result in spousal support being terminated. Spousal support is intended to help you get back on your feet after a divorce. So, if you were married six years, you’d generally expect to get spousal support for about three years and be fully self supporting after three years. Just be aware that if the Judge thinks you are refusing to work when you have the ability to work the timelines may be shortened.

If you have children with your spouse, your local child support enforcement agency (LCSA) can help enforce your support order. They are allowed to use tools such as wage garnishment or the withholding of tax refunds to ensure that spousal support debts are paid.

Your San Jose divorce attorney can explain the spousal support process in greater detail and help determine a reasonable amount of support for you to request as part of your settlement.

Understanding the Tax Implications of Your Divorce

After your Santa Clara County divorce, taxes are probably the furthest thing from your mind. But it’s important to be aware of the possible tax implications of ending your marriage so you’re not left with any unpleasant surprises come April 15.

Your filing status is generally determined by your marital status on the last day of the calendar year. If your divorce is finalized on December 31, you are considered divorced for the entire year.

If you have children, you may be able to claim their dependent exemptions if you are the custodial parent. Be careful to recognize that the Internal Revenue Service may not respect the terms of your Judgment or Order stating that you have the right to claim an exemption if you are not the primary custodial parent. If in doubt you should consider IRS Form 8332.  Because everyone’s tax situation can be different you may want to speak with a tax expert about these matters before you file your tax return. Be warned that two divorced parents can’t both claim the same child as a dependent, and if you both try it an audit is a likely result. Other tax credits related to the children, such as the American Opportunity or Lifetime Learning college credit, will generally go to the person who claims the child as a dependent.

Child support payments are not taxable income for the person who receives them, nor are they tax deductions for the person making the payments. Alimony, if the various legal requirements are met, can be both taxable income for the person who receives it (SEE Form 1040 line 11) and an adjustment to the income of the person who pays it (SEE Form 1040 line 31a). If you’re paying alimony, you’ll need your ex’s Social Security number and proof of the payments to deduct them on your return.

Asset transfers and home sales occurring as the result of your divorce could result in capital gains tax implications; however, if done both properly and timely they may qualify for a safe harbor (SEE IRS Code section 1041).  Because the safe harbor may only apply within 1 year of Entry of the Judgment you may want to consult with your tax expert and Family Law attorney about the need to get any transfers completed before that one year expires.

There are special rules that apply to retirement accounts, and you may want to have a qualified domestic relations order (QDRO) prepared to avoid having any penalties assessed that might result from you receiving those funds before age 59 1/2.

If you purchased your first home in 2008, 2009 or 2010 and received the first-time home buyer credit, that credit could retroactively be affected by your divorce if the home ceases to be your primary residence. How the Family Court will divide the loss of the credit between the parties will depend on the facts of your case, but the Court will consider a simple 50/50 split of this tax bill (SEE Family Code 2550).

You may find that your tax bracket has changed after your divorce. This may or may not be a positive change. If you and your spouse earned similar incomes, you were likely victims of a marriage penalty and placed in a higher tax bracket than you would be as a single person. However, if you were the higher earner and your spouse earned a much smaller salary, being married may have saved you money on your taxes.

Your San Jose Family Law Attorney can help you explore your settlement options, but it may be in your best interests to consider meeting with a financial planner if you are concerned about changes in your tax liability after divorce.

How to Choose a Family Law Attorney

Entering the Family Law Courts in California can feel like stepping Through The Looking Glass in an Alice in Wonderland story. The hall of broken promises (Family Court) can be a daunting and confusing place to be if you do not know your way around, and could leave you feeling that instead of life being your oyster, with you looking for a pearl, you are the oyster and the Court is singing The Walrus and the Carpenter. When you are under the emotional stress of divorce it is important to seek out the help of a good Family Law Attorney who can help steady you so that you can make good decisions.

Before you hire a lawyer to represent you, it is critical that you request an initial meeting where you can ask any questions that you might have. You want to hire the right attorney who will work well with you. Most lawyers will allow 15 to 30 minutes for this type of initial consultation, which is usually free.

Some good interview questions for your potential attorney include:

  • How long have you been involved in practicing family law?
  • Are you a State Bar Certified Family Law Specialist?
  • How often do you work on cases involving my specific issue?
  • Will you be personally handling my case? If not, who will be working on it?
  • What percentage of your cases are settled and what percentage end up going to Trial?
  • What is your opinion on the merits of mediation vs. litigation?
  • Do you work on retainer? What is your hourly rate? Are there extra fees for filing, travel, or other miscellaneous expenses?
  • Will I receive copies of any correspondence that relates to my case?
  • How should I contact you if I have questions about my case?
  • Is there anything I can do to make my case easier for you to handle?

You need to be comfortable with the attorney you choose. You do not want to choose an attorney who does not listen to what you have to say about your case or is so aggressive that he or she is creating unnecessary conflict.  Your Santa Clara family law lawyer is there to help you get a fair and just result, and help you navigate through what can be the treacherous waters of divorce Court.

Separate Property vs. Community Property

California’s community property laws will play an important role in the outcome of your divorce in San Jose. Separate property belongs solely to one spouse, but community property must be divided between spouses as part of the divorce settlement. The division doesn’t necessarily have to be a 50/50 split, but it must be equitable and fair.

Separate property includes:

  • Assets purchased before your marriage
  • Assets given to you alone as a gift, regardless of whether they were received before or during the marriage
  • Assets left to you as an inheritance, regardless of whether they were received before or during the marriage
  • Assets specifically defined as separate property in a valid prenuptial agreement
  • The pain and suffering portion of any personal injury settlement

Community property, sometimes called marital property, includes:

  • Income earned during marriage and all items purchased with that income, even if only one spouse works full time outside the home
  • Gifts given jointly to both spouses, such as wedding and anniversary presents from extended family members
  • The portion of a personal injury settlement that compensates you for lost wages

Keep in mind that it’s possible for an asset to be part community property and part separate property. For example, if you worked at a job for five years before you were married and five years after you were married, half of your retirement account would be considered community property and half would be considered separate property. The same principle holds true for a business you owned before the marriage and added value to during your marriage.

Assets that would normally be considered separate property can be transformed into community property if co-mingling occurs. For example, if you inherited $50,000 from your mother and put the money in your joint bank account, it would be impossible to tell what funds used were from the inheritance and what funds were your regular household income. Thus, the entire sum of the account would be determined to be community property.

Engagement rings, even if they are very valuable or a family heirloom, are considered gifts to the person who received them. They do not need to be returned after a divorce.

If you have questions about the division of property, it is best to contact a qualified California divorce attorney who can provide details that are specific to your case.