Under current Federal tax law, if you have lived in the same house for two of the last 5 years as your principal residence, individuals are exempt from capital gains taxes of up to $250,000 in taxable profits on the sale of your house, and $500,000 in taxable profits for married couples.
For any profits above these amounts, capital gains taxes are assessed of 20% would be assessed, which married couples would be equally liable for.
There are occasions where one of the spouses involved in a divorce wishes to “bifurcate marital status” while their divorce is pending, meaning that the Court can restore the parties to single persons while the rest of the dissolution case is still pending. For example, one of the spouses may wish to remarry, and they cannot legally do so without first terminating their marital status.
However, the parties must first determine the approximate amount that their residence has appreciated in value since they bought it, because if one spouse decides to keep the marital residence and marital status has previously been determined, that spouse would be considered a single person for purposes of state and Federal tax laws and thereby only be entitled to the $250,000 tax exemption instead of the $500,000 tax exemption. The tax implications are be substantial and should be considered in any settlement negotiations.
You should always consult with your tax professional before making any decisions in your divorce case.
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.
Under California law, most property and debts of the marriage will generally be characterized as either community property or separate property.
“Community Property” is all real property (i.e. real estate) or personal property that you and your spouse acquired through labor or skill during the marriage (i.e. from date of marriage to date of separation). Community Property means that each spouse has a one-half interest in such property, regardless of whether property is in only one of the spouses’ names or whether only one of the parties worked during the marriage.
In addition, debts incurred during the marriage are generally considered community obligations, even if the debt is in only one of the spouse’s names. There are some exceptions to this rule, such as student loans, which are considered the separate property debt of the spouse who incurred such student loans because they also get the benefit of the education obtained as a result of such student loans.
Pursuant to California law, Community Property assets and debts are generally divided equally between the parties. However, the parties can agree to a division of property that favors one spouse over the other.
It is highly advised that any marital debts be paid off from the proceeds of the property division so that both parties can start over with a “clean slate” and also so that there is no risk that the other party may default in paying a debt that they agreed to do in the divorce. However, this is not always an option in situations where the parties have more marital debts and obligations than assets.
“Separate Property” is property and debt acquired prior to marriage, property acquired and income earned after date of separation, and any gifts or inheritances received before, during or after marriage. Such property is not divided in the divorce because separate property is not marital property.
In addition, Family Code Section 2640 entitles the reimbursement of a spouse’s separate property contribution of the down payment made on a community property home and any improvements made to such community property home, if you can prove such payments with sufficient documentation.
Unfortunately, property division can become complicated in situations where separate property has become commingled (i.e. mixed) with community property, such as bank accounts. Moreover, there can be situations where one spouse contends that an asset is their separate property asset while the other claims that there was a “transmutation” of the character of the property from separate into community property. Such determinations can be complicated and you are best advised to seek legal advice to deal with those issues.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
Dividing community property and debts is one of the primary goals of a divorce settlement. California is a community property state, which means that most property and debts acquired during a marriage are considered to be community property by default.
When divorcing, it is important to remember that community property and debts are still owned jointly by the couple until a settlement agreement is reached and the judge issues a final order based on that agreement. This is true even if the couple has already come to a personal agreement on how property should be divided. Therefore, financial actions should be performed with caution until the final order is issued.
Date of Separation
Only property and debt acquired by the couple over the course of the marriage is considered community property; property and debts acquired before or after the marriage is separate property. Therefore, it is very important to establish the date of separation.
After the date of separation, it is best to keep new earnings and debt separate as much as possible. For example, each spouse should open their own bank account and credit card to handle their separately following the separation.
Dividing Assetsand Debt
The distribution of assets and debt must be equal when divorcing. Ideally, the couple will be able to reach a settlement agreement that outlines who receives which assets and which debts. One spouse might receive the condo and the other all of the furniture and cars, or the divorcing couple may sell all property and split the proceeds.
Debt can be used to even out the division of property. For example, the spouse who gets the house may also take over more of the debt. It can take some creative thinking to distribute assets and debts evenly.
Debts should be divided carefully in order to ensure that only the spouse who is assigned the debt in the divorce settlement is legally responsible for that debt. For example, if the credit card debt is in both spouses’ names, it may be necessary to do a balance transfer to a credit card that only has the name of the spouse responsible for the debt.
Importance of Transparency
Each spouse must be transparent about their financial situation as the divorce proceeds, both for the sake of separation of property and for the sake of establishing spousal and child support if necessary.
Divorce requires full financial disclosure of the assets and debts owned by each spouse, under penalty of perjury. In more complex divorces, such as cases where one spouse owns a business, forensic accountants may be hired to gather the information for an accurate financial picture.
Dividing community property and debts can be a challenge even when both parties are committed to reaching a settlement agreement through divorce mediation. For further information or to schedule a consultation with Orange County divorce mediator Gerald Maggio of California Divorce Mediators, please call (949) 553-0911 or visit www.cadivorcemediators.com.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
For many families, a divorce settlement is not only the end of one story, but also the beginning of several new ones. Children will get older, lives will change, and new circumstances and opportunities will arise.
With those changes, practical and legal issues will arise. What if a parent wants to move away while the children are still young? What if one of the parties’ financial situation changes substantially?
Change and conflict do not have to create family turmoil and stress. Divorced spouses can plan to collaboratively handle and resolve conflict. Returning to mediation can be a powerful tool in the process of keeping post-divorce life moving forward.
If one or both parents wishes to modify the custody agreement, the return to mediation should be automatic. If they arrive in court without a complete agreement about every aspect of the new arrangement, the court will mandate the parents to see a court-appointed mediator.
Mediation can protect children from emotional damage by providing a collaborative, rather than combative, context for working through disagreement and creating an acceptable arrangement.
Changes in support can also lead a family back to mediation. When employment or financial circumstances change, support issues can arise. Disagreements over money are unpleasant, but spending a lot more money in court fighting over money is worse for everyone — and often needless.
Private divorce mediators are trained to help divorced spouses work through financial arrangements productively. Post-divorce support mediation avoids the long court process and puts the spouses in control of the outcome.
For further information or to schedule a consultation with California Divorce Mediators, please call (949) 553-0911 or visit www.cadivorcemediators.com. California Divorce Mediators is an experienced Divorce Mediation and Family Law firm serving the Orange County and Riverside areas and neighboring counties, serving individuals, couples and families with legal issues including divorce, legal separation, spousal support, child support and child custody issues.
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.
Although one party may have to pay child support to the other parent, it is important to understand that California law mandates that both parents have an equal obligation to support their child.
Furthermore, California law provides guidelines to courts to determine the appropriate amount of child support, based on a formula that is incorporated into a complicated child support calculator software program, such as Dissomaster or XSpouse. The calculation factors in both parties’ gross monthly income (i.e. employment income, investment income, and rental income all constitute “income”) and the percentage timeshare each parent has with the child. amount of time each parent spends with the child. In order to be able to get an accurate child support calculation, you need to do your homework:
1. Gather Your Financial Records:
You will need all documents containing information on your income, deductions, and tax information, such as:
Tax returns
Pay receipts for the last 2 months
W2’s or 1099’s (Schedule Cs and profit-loss statements if self-employed)
Disability or unemployment benefits
Monthly childcare expenses
Monthly health insurance premiums
Mandatory retirement and union dues contributions (if in a union or state employee)
Necessary job-related expenses not reimbursed by your employer
Spousal support paid in other relationships
Extraordinary health care expense
Child support paid for children of other relationships
2. Consult with an Experienced California Family Law Attorney.
Although there are free child support programs online, the calculations for child support can be complicated and the free programs are not always the most accurate. Virtually all family law attorneys in Orange County and in California should have one of the main child support software programs that are used by the courts, while allows them to give you more accurate calculations. Working with an experienced family law attorney will help better determine that you are paying or receiving the appropriate amount of child support.
3. Determine If You Are Eligible To Claim A Hardship Deduction
Generally a parent can claim a child from a different relationship as a hardship to lower their child support obligation if (1) The child is the natural or adopted child (i.e. not a steparent) of the party, and (2) the child eligible for a hardship deduction must reside with the parent.
4. Understand When You Can Seek a Modification of a Child Support Order
A child support order in California can be changed if there has been a substantial “change of cirsumstances” since the original support order was made. A change in circumstances can include:
The involuntary loss of a job;
Incarceration of a parent;
Upward or downward change in income;
Significant change in the amount of custodial timeshare that the child spends with each parent.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
When two people are on the verge of divorce, they often go with the first option they see, which is litigation. Although litigation is the most commonly sought out process, but have you ever stopped to think if it is the most logical one? In actuality, it is not a logical choice and under only certain circumstances such as mental, physical, and drug abuse is litigation appropriate.
In other circumstances when the divorce is due to irreconcilable differences, the divorcing partners should hire the services of a divorce mediator. Here is why hiring a divorce mediator is the most logical choice for divorcing couples:
1. If Children are Involved
You may or may have children, but if you do, you should choose divorce mediation. As parents, you need to put the needs of your children first. Dragging them into court will not achieve that, as it will only make them more miserable. You don’t want to disgrace your partner in front of your children as well. A couple with kids will only understand how important it is to maintain a co-parenting relationship after the divorce is finalized.
2. If Neither Party has Money
The litigation process is costly and for people who can’t afford it may be left penniless in the end especially if the other spouse’s aim is to take them to the cleaners. On the other hand, divorce mediation is less costly and will save you money. For this reason, discuss with your partner to hire the services of a divorce mediation firm to reach an amicable agreement on issues.
3. If the Parties Want to Remain Civil with Each Other
If you share the same group of friends and have increased chances of running into each other, litigation is the wrong process for you. Divorce mediation will help both you come out like winners. With the help of the mediator, you both would have reached a mutual agreement agreed on by both of you. Leaving the meetings on a friendly note will help you remain on good terms with each other.
4. If the Parties Want to Move On
After the divorce, you want to move on with your lives. You will be unable to if getting a divorce takes longer than you expect. That is why choosing divorce mediation is more logical. It only takes about three to four months to come to an agreement. You both will be able to go back to school, date other people, or move on to another state. Divorce mediation will help you achieve your goals faster.
If you were wondering what the most logical decision to get a divorce is, the answer is divorce mediation. You, your partner, and others around you can benefit from choosing to get an amicable divorce that doesn’t consist of arguments.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
If you have kids and are currently on the path to divorce, you want to make it as amicable as possible. Parents who have already gone through a divorce understand the impact it has on kids. The burden children take with them when parents can’t stop fighting sometimes becomes too much to handle.
No matter how hard parents try to show that they care for each other, the hurt feelings that has accumulated over the years can become too much to keep inside. Not every divorce is ugly though.
Even if parents are putting up a calm demeanor in front of their kids, the kids will still be caught in the middle of the divorce when it comes time to decide on who gets custody. If you are thinking of parting ways and you have kids, you may want to try child custody mediation for the following reasons:
1. Custody Mediation is Easier on Kids
Going into court, fighting for assets, and, most importantly, the custody of kids can take a toll on your little ones. Why put them through this torture in the first place? Why not choose divorce mediation over litigation. During divorce mediation, both parents are encouraged to put their anger and interests aside and think what is best for the kids in this situation.
2. The Custody Mediator Doesn’t Take Sides
If you live in California for instance, you may want to hire an Orange County divorce mediator and custody mediation firm to provide you with a professional and reliable divorce mediator to help both of you decide on how to deal with the situation successfully.
The mediator will come up with a plan during the meeting to let you two see the best way to navigate through your divorce, especially child custody issues. Instead of focusing on issues of why you two decided to divorce, the mediator will work towards coming up with a solution to benefit you and your kids.
3. Child Custody Mediation Creates a Parenting Plan
Apart from coming up with a resolution, the custody mediator will also develop a parenting plan that will take into account the parents’ concerns about the well-being of their kids. Therefore, instead of seeking full custody of your kids, try to come to an agreement to seek joint custody. Of course, this is assuming your spouse is fit to take care of the children. If there is any doubt as to that, then perhaps mediation is not appropriate and going to court to seek sole custody might be advisable.
4. Custody Mediation Reduces Conflict and Stress
The custody mediator will help the divorcing partners establish skills to communicate effectively with each other. This in return will help reduce the stress on the children. Moreover, you will benefit from it as well, as the constant bickering does nothing, but puts more stress on you. Through this process, you both may be able to tolerate each other more for the sake of the kids.
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.
Even ten years ago or less, not many people had ever heard of divorce mediation, and not many attorneys offered such option. Back then, people were quick to acquire the services of a lawyer and drag their financial and personal matters to court. The situation just gets worse from there. Not only you, but also your close relatives, may be caught up in the divorce proceedings as well.
The constant advice on how to handle the matter and the biased stance of your relatives doesn’t help either party view things logically. It turns out to be a grueling process in the end, which leaves the bank account of each partner dried up depending on the fight each side puts up in attaining the assets.
You don’t and in fact shouldn’t put this much stress on yourselves and find a more peaceful way out of the marriage. Divorce mediation is your ticket to getting a divorce without disliking your soon-to-be ex. The following reasons sum up why divorce mediation is the right choice for couples:
1. You will Not Hate Each Other
If the two of you are still able to maintain a level of decorum when around each other, divorce mediation is the right choice for you. Through divorce mediation, both partners will be able to discuss issues openly that plague them. Once the settlement agreement is signed, the two conflicting partners may be able to show respect to each other if they run into each other in the future, as no hard feelings will remain between them.
2. You will Understand Each Other Better
People divorce because they couldn’t get along with each other anymore and often clashed on certain issues. The divorce mediator will see to it that these issues are properly addressed. If an issue about division of property for instance needs to be taken care of, the divorce mediator will present a variety of solutions for the couple to agree on. If one partner rejects an idea while the other partner accepts it, the idea will be thrown out until a mutual decision can be made.
3. You can Make Your Own Decisions
The divorce mediator is only there to help you come to a decision. In the end, it is up to you to decide what the solution to issues such as parenting (if you have kids), property division, amongst others will be. By far, divorce mediation is the perfect way to come to an educated solution to a serious issue. If you had chosen litigation, the judge would be making all of the decisions and not you.
4. You can Save Time and Money
Divorce mediation is a quick process that doesn’t cost you a lot. It is much cheaper than choosing the litigation process to acquire divorce. The mediator is neutral and is thinking about both of you. In a few sittings, many issues can be easily taken care of. If either partner is having scheduling conflicts, the mediator will work with you on deciding a day that works with you both.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
Filing for divorce is a huge step a person takes in ending their marriage. The second step people take is to decide on what type of divorce process they should go for. They can opt for going into the courtroom, but that would be too messy. In its place, divorcing couples should opt to end their marriage in a friendlier fashion that doesn’t get their blood boiling. Divorce mediation is the answer to exiting the marriage as adults. What happens in a divorce mediation? Read on to find out what happens when two people go in for a divorce mediation meeting.
The First Meeting
You meet with a qualified divorce mediator with extensive knowledge and experience on how to help the divorcing partners see eye to eye on serious issues such as division of assets, custody of kids (if they have any), and so on. During the first meeting, the mediator will thoroughly explain to you what takes place in a meeting and what can you expect from it.
Joint and Private Sessions
During the joint session, the mediator helps the partners realize the issues that need to be solved. The mediator knowing the animosity the two partners may have for each other will try to establish a peaceful environment to discuss various issues, ideas, and concerns. In addition, you need to provide them with financial information. During individual sessions, each partner may openly discuss the problems he/she may have with each other (the information will remain off the record).
Come to a Financial Resolution
After reviewing all the assets, the mediator will help the couple come to a joint decision on the distribution of assets. This may also include discussions on personal property and palimony or alimony. Resolutions at this time should be reached unless one of the partner disagrees on the resolution then other ideas would be tossed around.
Discussion about the Custody of Kids
In case you have kids, the issue who gets custody of them will be addressed. If you don’t have children, then this step will be skipped. In the instance that you have kids, joint, sole, and physical custody will be discussed, healthcare, and vacation agreements will be reached also at this time.
The Agreement is Drawn Up
After a lengthy discussion on what each partner wants in return, the mediator will go ahead and draw up a draft. If one of the partners rejects the terms and conditions complied in the draft, they may request a new one to be drawn up. In majority of cases, the partners settle on the draft version as the final one.
The mediation process is a calm and peaceful process that people should try if they are planning to separate. The process eliminates the usual taunts and fights that many people who choose traditional divorce go through. Therefore, if you are thinking of separating from your partner, feel free to get in touch with us.
To learn more about the divorce process in California and how mediation can help, please visit our page, “What is Divorce Mediation.”
The first thing that comes to mind is how the kids are going to handle the news that their parents have decided to go their separate ways. Divorcing couples with kids may find it difficult to break the news to them. Once they do, deciding on a parenting plan can become a difficult decision. Both parents may even file for sole custody to spite one and other. In doing so, they are only harming their children.
Children don’t want to see their parents constantly trying to put down each other. Although parents may take caution when they speak, in the heat of the moment, wrong things may come out. To help ease the tense situation that may have developed in your household due to your announcement, you may want to acquire the services of a divorce mediator to assist you develop a parenting plan that you both can agree on:
1. Develop a Plan to Suit a Child’s Needs
The children may be under a lot of stress upon hearing such sudden news even if they had predicted that this would be the outcome. Due to the constant argument, and then the divorce announcement, they may be filled with a variety of emotions. The parenting plan is developed keeping your child current developmental, temperamental, and emotional needs in mind.
2. Address Looming Problems Prior to Going to Court
You may have sought child custody divorce mediation because you wanted to lessen the pain your children felt. If some problems regarding the child’s upbringing and the issue on who will get the child on what days, can be addressed during divorce mediation. It will save you both the trouble to decide this beforehand with a mediator, as this issue can take on a heated nature in the courtroom.
3. Divorce Mediation Helps Parents See Straight
When couples dislike each other, their judgment on certain issues can become clouded. A divorce mediator helps you see straight. They help you come to a mutual understanding of the underlying issue at hand. By presenting you with good conflict resolution skills, your children will learn to adopt them as well.
4. Parenting Plan Conveys a Positive Message
When two parents are at odds with each other, everyone expects to see a fight. To avoid being the town gossip, set an example for the school, other parents, and most importantly for your kids. Come up with a detailed parenting plan that addresses both the partners concerns about their kids. The children will definitely see the upside of this for their parents are finally collaborating on something, which concerns them.
5. Divorce Mediation Exposes Parents to Co-Parenting Issues
With a third person present in the room, it will help parents see more clearly. The trained mediator will present them issues that can become a hurdle for them in the future if not dealt with them earlier. The plan, when drawn up, will address all of those issues.
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.
Under current Federal tax law, if you have lived in the same house for two of the last 5 years as your principal residence, individuals are exempt from capital gains taxes of up to $250,000 in taxable profits on the sale of your house, and $500,000 in taxable profits for married couples.
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. 
