Late life divorces are increasing in number as more and more people live longer. A recent study has revealed that one in every four divorces are late-life divorces. Like any divorce, a late-life divorce can be hard hitting on the financial front. But a late-life divorce could ruin people with the best retirement plans.
The cost of living separately is much higher than the cost of living together as the number of accommodations and facilities double. In simpler words, an elderly couple that have been together for a long period of time would have likely planned their retirement together. When a divorce is filed, one of the spouses will have to move out and more often than not, have to plan separate occasions to meet other family members. All of this, could drive expenses up by 30 or 40 percent.
Anyone involved in a divorce will tell you that it is one of the most expensive scenarios to deal with. For people aged 50 or over, this could spell the destruction of their financial plan altogether. A financial planner or advisor needs to be consulted in order to understand the circumstances. This is especially true, if one of the spouses handled the finances throughout the marriage.
In some cases, retirement benefits might be more valuable than all of the couple’s other community property combined. This might form conflict on the division of the benefits. Some forms of benefits such as social security, military compensation, and workers’ compensation for disability are not considered to be community property and will remain with the individual after divorce.
Retirement Allocations
In California, retirement is considered to be community property that can be divided amongst both spouses. However, retirement divisions are handled outside of the usual divorce proceedings. A Qualified Domestic Relations Order (QDRO) outlines the division of the retirement funds. It is usually filed after the divorce judgment. The QDRO is needed to divide 401k, 403b, profit-sharing plans, tax sheltered annuities and other aspects.
During divorce proceedings, the QDRO calls for the equal division of retirement assets. However, mediation and negotiation can help spouses agree on different rates or division percentages. The QDRO is the final indicator of division of retirement benefits. Divorce attorneys often hire QDRO specialists to help segregation and division. Once both parties have agreed on the division of benefits, a QDRO is filed.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Divorce can become a complicated subject, especially when debt becomes a part of it. If you are a married person, then you know what that means. There have been cases where one person walked away without paying a single cent while the other went bankrupt. It could be a nightmare for the one paying the debts.
How you handle debts after your split can have a major impact on your credit.
Debt on property
In states like California, both you and your spouse are liable for the debts incurred after you got married. It does not matter in whose name the account is. Both of you are responsible for the property purchased and the debt as to be shared. In other states, the debt is paid off by one person only. It might not sound fair but that is the law in those states.
Debt on credit accounts
The same goes for credit accounts as well. Since the credit was shared by you and your spouse, the debt too must be shared. Even if the divorce rules say that your spouse is responsible for paying the debt, you will still be a part of it. You miss the payments, and you become a defaulter. If you become a defaulter, then your credit score drops, making it harder to get credit in the future.
Handling joint debts
After you get divorced, make sure you close all joint accounts that are in your and your spouse’s name. Remove your spouse’s name from the authorized user list. Try getting the account converted into individual accounts if you can.
Try paying off as many debts as possible before the actual divorce. It will keep you prepared for any extra charges that might incur during your divorce proceedings.
Minimizing damage
When you close accounts, make sure that the credit accounts are in your name. Doing so will give you control over your money and you would not have to worry about any unknown debts.
It’s common among couples that one person borrows while the other spends. If you are one of them and you are on the spending side, then talk with your partner and work out a common ground. Understand that if your credit score is low, future lenders would not lend you money. Before you get divorced, try clearing as much debt as you can together.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Gerald A. Maggio is a trained Riverside divorce mediator who has amicably resolved cases many cases out of court, as well as an experienced divorce and family law attorney. Mr. Maggio founded California Divorce Mediators in 2012 with the belief that although “not every marriage can be saved, every family can” and a mission to save families from the financial and emotional distress associated with traditional divorce litigation. California Divorce Mediators is located in Irvine, California, and serves the Orange County area and other counties in California offering divorce mediation, child custody mediation and mediation of other family law matters.
In the State of California, debts between a couple are divided into two types – community debts and separate debts. Community debts are those debts that are accumulated by both parties to the marriage during the marriage until the date of separation. These debts are to be equally divided between both the parties even if only one spouse was responsible for incurring these debts. Separate debts are those debts that were incurred separately by the parties before the marriage or after separation and belong to the individual spouses who were responsible for incurring them.
Treatment of debts in California between a divorced couple
All debts in the State of California are to be treated as community debts as California is regarded as a “community property” state. This is of course unless the parties to the marriage had entered into a prenuptial agreement before the marriage regarding the division of assets and debts between them in the event that they decided to get divorced. If there is no prenup, then the court equally divides all debts between both spouses equally.
However, there is one exception to this rule and that is when the total value of the community debts exceeds the total value of the community assets jointly held between the two spouses. In this case, the court will order for a higher portion of the debts to be borne by the spouse who earns a higher income or who is in a better financial position to pay off these debts.
Importance of the date of separation
In the division of community debts in the State of California during a divorce, the date of separation of the couple is extremely important as only those debts that were incurred before the date of separation will be included in the community debts and all other debts incurred post the separation date will be assigned to the spouse who individually incurred them and the burden of paying those debts post-separation will not be borne or shared by both spouses.
Deciding the date of separation is sometimes a difficult task especially when the couple is in total disagreement with each other. Two tests can help confirm the actual and legal date of separation between a divorcing couple in the State of California –
The first test is to determine the date of physical separation between the spouse, that is the date on which they began living or sleeping separately or the date on which one of either spouse moved out of the house.
The second test is to determine when either spouse expressed their clear intention to end their marriage. This does not include a trial separation.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
A divorce can be a complicated process when assets and properties are involved. Through mediation a part of the problem can be solved but since it is a question of finances, couples tend to be skeptical. In case of business, things become even more complicated because unlike other assets, a business has the opportunity to become more valuable. The one who owns the business can claim the business as his/her own as part of the separate property but when it is owned by both, the division becomes difficult.
The establishment time of the business
If the business was established before the marriage, it is most likely that it will have a separate part to it. If you can show that there is a separate part and that it belongs to you, then the court will award it to you. But if you fail to show any such evidence which indicates that part of the business belongs to you, the court is liable to divide it based on the laws governing the division of assets.
Family business
For people who run a business that has been passed down to them from his/her family, the question of division is an important one. They, obviously would not want to part with the business due to emotional attachments. Again, if the business was solely passed to you and no one else and if such a fact can be supported by documents, then the business belongs to you as a separate property. However, if the business was passed on to both you and your spouse, it become a marital property and is subject to division.
Separate property funds
One of the most important things governing your business is property funds. A business could have started when you got married but that does not make it a marital property. If the business is built on property funds that was allocated by you, it can very well fall under separate property. A California court will look into many factors once it establishes where the property funds came from. Things like profitability and value will play a big role in determining how the business will be divided.
Conclusion
Divorces can be scary when the division of property is in question. It becomes worse when property is a business. A California court will look into different factors like who primarily owns the business, whether it was passed down from a family or not and who is responsible for the property funds. After looking into each and every factor it will decide how the business should get divided.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
You would be well aware of the fact that once you separate from your spouse and start a new life from scratch, you will need substantial financial support to pay your bills and maintain your regular standard of living. It is, therefore advisable, to organize your finances and assets in such a way that your spouse cannot obtain an undue ownership of what is rightfully yours. By devising a solid plan before you go on to file a divorce, you can legally protect your assets and rest assured that you will not be left with an empty bank account when the final verdict is announced. Here are a few ways in which you can protect your property and assets in the event of a divorce or a legal separation.
Organize your separate property
It is important to create an inventory checklist of all the items that have been given to you separately, to ensure that they do not get mixed up with your marital or community property. It may include any specific possessions such as jewelry or family heirlooms that have been directly inherited by you. You can also take photographs of the items on your separate property list, to prevent your spouse from claiming them on the grounds of obscurity. After preparing the catalog of your valuables, you can move them to a safe place so that you do not miss out on them in case you have to leave your marital home.
Gather proof of gifted or inherited possessions
It is a good idea to go up to the concerned people and request a written and signed proof to state that the items were solely given to you and not your spouse. The court of law demands evidential proof of every little thing that is brought forth to a trial. It will be easier and more convenient for you to prove your ownership of a separate property in front of a judge if you possess an attested statement to support your claim.
Sort out your rent and mortgage payments
The lending companies and landlords expect you to pay the monthly installments, regardless of what your present situation might be. If the situation arises you may have to move out of your marital residence before or after filing for a divorce. Although, you will still be obliged to make one-half of the mortgage or rent payments, this action of yours can be detrimental to your claim in the share of your home. It is therefore advised to have a peaceful and practical discussion with your spouse and reach a mutual agreement about who will be entitled to become the rightful owner of your marital home post-divorce.
If you are thinking of getting a divorce from your spouse, you should organize your finances right away, even before you file a petition in the court and proceed with divorce mediation.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Dividing family owned businesses can be very tough if you and your spouse are not on the same page. And by being of the same page it means understanding how importance the family owned business is. You might be the owner of a business that was passed down to you by your family and suddenly your divorce splits it into two. Your partner may not be interested in the business but despite that gets a half of the business. It can be very disappointing.
Businesses can be viewed as property
During a divorce, businesses are viewed as properties. Two important factors that play a major role in determining this are classification and worth of your business. Your business can be classified as either a community property or a separate property or even both. How much your business is worth depends on the amount of money generated by your business and the net worth of your business.
Equal division of business
If you own a business then you know how much time, effort, and money you have spent to establish your business. Now, imagine if everything that you built were divided in half and one half was given to your wife? Heart-breaking, isn’t it? Well in California this is exactly what happens to your property during a divorce. California, being a community property states, require that every property belonging to the marital “community” be divided in half. This includes family owned businesses as well.
The best solution to save your business from splitting in two would be signing a prenuptial agreement or some other exit strategy cleverly developed by an experienced lawyer. Another option would be to work with your partner in the same business. Both solutions are tough because you need an amicable relationship with your spouse and if you have that why would you be heading towards a divorce then?
Protecting the business
The first way to protect your business is to talk with your partner and agree on some mutual understanding. While talking, you need to keep your personal squabble out of it.
You must get your business valued if you are getting a divorce. If you both are joint owners, doing this is not a problem but if you’re not then things can get complicated.
If you both work in the same business, you can expect both of your roles and responsibilities to change. This reduces conflict of ideas and save the business from utter devastation.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Gerald A. Maggio is a trained Irvine divorce mediator who has amicably resolved cases many cases out of court, as well as an experienced divorce and family law attorney. Mr. Maggio founded California Divorce Mediators in 2012 with the belief that although “not every marriage can be saved, every family can” and a mission to save families from the financial and emotional distress associated with traditional divorce litigation. California Divorce Mediators is located in Irvine, California, and serves the Orange County area and other counties in California offering divorce mediation, child custody mediation and mediation of other family law matters.
In the state of California debts between a couple are divided into two types – community debts and separate debts. Community debts are those debts that are accumulated by both parties to the marriage during the marriage until the date of separation. These debts are to be equally divided between both the parties even if only one spouse was responsible for incurring these debts. Separate debts are those debts that were incurred separately by the parties before the marriage or after separation and belong to the individual spouses who were responsible for incurring them.
Treatment of debts in California between a divorced couple
All debts in the state of California are to be treated as community debts as California is regarded as a “community property” state. This is of course unless the parties to the marriage had entered into a prenuptial agreement before the marriage regarding the division of assets and debts between them in the event that they decided to get divorced. If there is no prenup, then the court equally divides all debts between both spouses equally.
However, there is one exception to this rule and that is when the total value of the community debts exceeds the total value of the community assets jointly held between the two spouses. In this case, the court will order for a higher portion of the debts to be borne by the spouse who earns a higher income or who is in a better financial position to pay off these debts.
Importance of the date of separation
In the division of community debts in the state of California during a divorce, the date of separation of the couple is extremely important as only those debts that were incurred before the date of separation will be included in the community debts and all other debts incurred post the separation date will be assigned to the spouse who individually incurred them and the burden of paying those debts post-separation will not be borne or shared by both spouses.
Deciding the date of separation is sometimes a difficult task especially when the couple is in total disagreement with each other. Two tests can help confirm the actual and legal date of separation between a divorcing couple in the state of California:
The first test is to determine the date of physical separation between the spouse, that is the date on which they began living or sleeping separately or the date on which one of either spouse moved out of the house.
The second test is to determine when either spouse expressed their clear intention to end their marriage. This does not include a trial separation.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
It is a common occurrence for warring spouses to hide assets when in the course of a contentious divorce. There are a number of ways a spouse may disguise or at least undervalue assets. One of the most common ways is to overlook or undervalue antiques, gun collections, hobby equipment, tools and artwork. Most of them come in the form of original paintings, collectible carpets or antique furnishings at the office of the spouse. There could also be unreported income on financial statements and tax returns.
Hiding methods
Undisclosed cash is frequently kept as travelers’ checks. These can be found by tracing the bank account withdrawals and deposits. There could also be custodial accounts set up in a child’s name using the Social Security Number of that child. Investments in the form of certificate municipal bonds or the Series EE Savings Bonds which do not show in the statement of accounts as they are not IRS registered.
Assets may also be hidden by colluding with the employer. Bonuses could be delayed; stock options given later than usual. The spouse may also request the employer not to give a raise until a time when the income or asset will be regarded as separate property. There could also be a phony debt to a friend or sudden repayment of money as debt. The assets could be hidden as expenses paid for boyfriend or girlfriends, like gifts, rent, or travel. Expenses may also be seen as tuition paid for classes or college. There could also be hidden retirement accounts.
Business persons
Other than the above, business persons may hide assets in a number of ways like stealing cash from their own businesses. Salary payments can also be made to non-existent employees. These are made with cheques which are made void post-divorce. Money could also be paid to a person close to the spouse, like mother, boyfriend, girlfriend or father for fictional services. Such money is then given back to the spouse post finalization of the divorce. There could also be delays in the signing of longer term business contracts. These are typically done post-divorce.
It is extremely hard to find evidence of such activities. Litigation may help to unearth such deals. To give an example, you can take a legal interview or deposition of the boss of the spouse or the payroll supervisor and then query them about your spouse’s income and the bonuses. You can also hire a private investigator or a forensic accountant.
However, if any of this is a valid concern in a divorce case, then the likelihood of being able to mediate the divorce is very limited, and litigation of the case is the more realistic option.
To learn more about the divorce process in California and how mediation can help where you and your spouse seek to be transparent in providing all information and documentation concerning assets and finances, please visit our page, What is Divorce Mediation.
During the financial settlement of a divorce, the court considers many factors. One of the factors that the Court considers is the age of both partners and the second is the length of the relationship. Note, however, that the outcome of a divorce case highly depends on the facts of an individual case and the financial circumstances of both you and your partner.
Why the duration of marriage matters
Two facets of property division can be influenced by your marriage’s length. First, the duration your marriage can decide the precise distribution of property. Second, the longer you are married, the more complex will be the property division and vice-versa.
It is believed that couples who have been wedded for a longer time are likely to have more property and more various property holdings or interests. Property may comprise real estate and related investments, closely held businesses or professional practices, employee stock options and grants. It could also include various retirement as well as investment accounts.
California Family Code section 4320
California Family Code section 4320 states that the shorter the marriage, the shorter the duration of alimony (spousal support) in the State of California. It also means that you get a shorter amount of time as a spouse to become self-supporting. Similarly, the longer the marriage, the longer the time you have spent outside the workforce, and so the greater will the duration of alimony be. The court will also provide you more time to get back into the workforce.
You might have heard or read that a marriage of 10 years or more means automatic lifetime alimony. Not really. If you and your spouse are married for less than 10 years, it generally means the alimony will likely be for no more than one-half the duration of the marriage. In some cases, if your marriage lasts 10 years or more, the court may determine that your spouse can become self-supporting and cut down the alimony accordingly. In most cases, the closer your marriage is to the ten-year mark, the more likely you are to receive less support depending on the court’s order. If you are married for a longer period of the time over 10 years, it means that normally the court will have continuing jurisdiction over the issue of spousal support and that other than the remarriage of the spouse receiving the support or the death of either party, there is no automatic termination date.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Despite your efforts to devote several hours a day in building your empire, you might end up witnessing your enterprise crumbling down to pieces as an aftermath of a divorce. If you have an angry and resentful partner, the chances of losing out on your well-established business becomes even higher. However, if you are well aware of your rights and know how to get them enforced, you can ensure that your spouse does not end up taking a massive bite of what is rightfully yours. Here are a few ways in which you can protect your business from becoming a controversial issue in a divorce lawsuit.
Sign up a premarital agreement
The best way to protect your business from an unwarranted division is to get your spouse to sign a prenuptial agreement that would stipulate the instructions for the evaluation and distribution of your business finances in the event of a divorce. However, if your spouse refuses to agree upon a prenup, you must at least take the assistance of an appraiser to determine the initial value of your business at the beginning of your marriage and make it easier to identify any appreciation or depreciation in due course of time.
Avoid involving your spouse as an employee
Although for several reasons such as tax benefits, most of the business owners end up appointing their spouses as employees in their company, it is advisable to refrain from this habit. The reason is that if you decide to separate from your spouse, he or she might end up making a claim to a portion of your business assets on the pretext that they too have actively contributed towards its growth and profits. However, if you already have your spouse working for your business, you must make it a point to fire them right away and save yourself from undue claims.
Trade off other assets
For the division of property in the event of a divorce, the court adds up the total assets of a couple and carries out an equitable distribution between both the parties. It is always advisable to try and retain complete ownership of your business by paying the buyout price in the form of other marital assets such as your family home, car or retirement accounts.
To learn more about the divorce process in California and how mediation can help, please visit our page, What is Divorce Mediation.
Late life divorces are increasing in number as more and more people live longer. A recent study has revealed that one in every four divorces are late-life divorces. Like any divorce, a late-life divorce can be hard hitting on the financial front. But a late-life divorce could ruin people with the best retirement plans.
Gerald A. Maggio is a trained Orange County divorce mediator who has amicably resolved cases many cases out of court, as well as an experienced divorce and family law attorney. Mr. Maggio founded California Divorce Mediators in 2012 with the belief that although “not every marriage can be saved, every family can” and a mission to save families from the financial and emotional distress associated with traditional divorce litigation. California Divorce Mediators is located in Irvine, California, and serves the Orange County area and other counties in California offering divorce mediation, child custody mediation and mediation of other family law matters. 
