Posted May 31, 2018 in Family Law by Michael Lonich.

California laws for property division in divorce has undergone significant change over the years. Due to its Spanish roots, California began as a community property state, in which all property acquired during the marriage is part of the community thus subject to equal division in divorce. Divorce in California really took off in 1969 when Governor Ronald Reagan signed into law “no-fault” divorce making California one of the first no-fault divorce states. The new law eliminated the need for couples to articulate spousal wrongdoing in pursuit of a divorce. In the decades that ensued, almost every state in America would follow California’s lead and enact “no-fault” divorce of its own. This legal transformation would open the floodgates to divorce in the United States. From 1960 to 1980, the divorce rate more than doubled. With the major influx of California divorce came novel legal questions on how to fairly divide property between divorced spouses. The California legislature and judiciary would create new laws to address these issues.

Perhaps the most landmark amendment to the Family Code is the addition of Family Code §2640, which requires reimbursement of a spouse’s traceable separate property contributions towards the acquisition of community property before division can commence. Under this statute, all separate property used to obtain a property with joint and equal ownership is reimbursable separate property. Moreover, Family Code §2640 states that the spouse who made a separate property contribution is entitled to interest-free reimbursement for the down payment, improvements, and principal, but not an ownership interest. This reimbursement also does not include payments towards taxes, insurance, or maintenance.

Prior to the enactment of this statute, the California Supreme Court presumed that any separate property funds (e.g. money acquired before marriage and inheritances) used to purchase an asset during the marriage was presumed to be a “gift” to the community. This presumption, colloquially referred to as the “Lucas Presumption” precluded a spouse from claiming any interest in a community asset regardless of whether the spouse spent much of his own separate property money to purchase it. In most cases today, the Lucas Presumption no longer applies, thanks to the 1984 California Legislature. However, in certain rare cases for property acquired before the statute, the court will use a two-part analysis to determine whether retroactive application of section 2640 violates due process under the Constitution. First: The significance of the state interest served by the law and the importance of the retroactive application of the law to the effectuation of that interest; and Second: The extent of reliance upon the former law, the legitimacy of that reliance, the extent of actions taken on the basis of that reliance, and the extent to which the retroactive application of the new law would disrupt those actions. (In re Marriage of Heikes (1995) 10 Cal.4th 1211, 1219).

even if the property was acquired after 1984 and either party is entitled to reimbursement under section 2640, it is vital that the necessary records are maintained so that a court can trace the funds from the community asset back to all separate funds. Burden of proof and problems arise if the monies were commingled into a joint account. These issues are especially apt in lengthy marriages where a spouse may not have kept a record of his or her separate contributions. As previously explained in other blog posts, the best way to ensure adequate accounting for separate property assets is to proactively keep an inventory of its rents, issues, and profits. In instances where a community asset is purchased with commingled funds it may still be possible to obtain reimbursement under the method of tracing by recapitulation. Under this method, a court may conclude that the asset was purchased with separate funds if the party can prove that all community funds had been exhausted by community expenses at the time of the transaction.

The date of separation has also undergone significant change in California. The date of separation in a California divorce can play a very important role in determining the division of assets and debts. It can be the difference between whether an asset is community or separate property and whether a marriage is of “long duration” or “short” for purposes of determining spousal support. Initially, the rule was that the date of separation occurred when either spouse did not intend to continue the marriage and their conduct was consistent with the complete and final breakdown of the marriage. Then in July 2015, the California Supreme Court abrogated that rule in a decision called Marriage of Davis. This decision created a bright-line rule making physical separation a necessity to separate. This meant that parties who could not afford to live out on their own were precluded from legal separation. Many family law lawyers, judges and the California legislature did not like this decision. Thus, in 2016 Governor Brown signed into law Family Code section 70 defining separation as the date that a complete and final break in the marital relationship has occurred, as evidenced by (1) a spouse’s intent to end the marriage and (2) conduct of the spouse that is consistent with his or her intent to end the marriage. The law requires courts to take into consideration all relevant evidence.

If you are seeking information or counsel regarding estate planning or protecting your property during divorce, please contact one of the experienced attorneys at Lonich & Patton – we offer free half-hour consultations. We also offer free wills to all of our family law clients during the process of their divorce.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

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Posted May 4, 2018 in Estate Planning by Michael Lonich.

Going through divorce may be one of the most challenging and stressful ordeals you will experience. There are numerous questions you have to answer, a slew of documents you have to dig up, and brings an incredible amount of emotional turmoil. While you may be ready to forget your ex-spouse completely, do not forget to change your estate plan.  If you have a previous plan, you likely named your ex-spouse as the successor trustee, executor, power of attorney, and/or beneficiary. It is very unlikely that you will want to leave your ex-spouse in that role, making it vital to change your estate plan.

In a revocable trust, the trustor or trustee, not the beneficiary, has control over when and if the benefits are distributed. However, when you die, whomever you named as executor of your will or successor trustee of your trust will have control over when and if the benefits are distributed. It is likely that you would designate your spouse as executor and successor trustee during marriage, so it will be important to have a new estate plan done, in order to designate a new person to fill these rolls. It is your decision who will fill the roles. Your executor or trustee does not need any special training, but must be an organized, prudent, responsible, and honest person. Additionally, you will want to consider who is named as beneficiary on any retirement accounts, life insurance, or additional benefits. If you had named your spouse, you would want to give your estate attorney at least one new person who would be a beneficiary.

While most assets are subject to your estate plan at death, there are some exceptions. These exceptions include life insurance policies, IRAs, and other tax-deferred retirement plans. These are distributed according to beneficiary designations, which override the designation in your will or trust. It is important to update beneficiary designations right after the divorce, if you choose not to during the process, as just updating your estate plan will not affect who gets the benefits of these plans.

Further, if your ex is your agent on your durable power of attorney for property, you should consider changing his/her name immediately to prevent your ex from having unlimited access to bank accounts or financial assets. Additionally, you should name another person as your agent to make health care decisions for you if you are unable to make your own decisions. It is important to also name an alternate agent to act for you if your first choice is not willing, able, or reasonably available to make decisions for you.  You may choose to limit the authority of your agent, but if you choose not to limit his/her authority, they may, but are not limited to, consent or refuse care, treatment, or procedures, agree to tests, surgery, and medication, and designate anatomical gifts. Who you choose to make these decisions should be someone you believe understands and will respect your wishes.

Finally, you may also be wondering how to provide for your minor children in the event of your death, if your ex has no custody rights over them. You should nominate a guardian to supervise and care for your child until he/she is 18 years old. Under California law, a minor child would not be legally qualified to care for him/herself, or to manage his/her own property. You can make the designation in your estate plan.

If you are seeking information or counsel regarding estate planning or protecting your property during divorce, please contact one of the experienced attorneys at Lonich & Patton – we offer free half-hour consultations. We also offer free wills to all of our family law clients during the process of their divorce.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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Posted April 6, 2018 in Family Law by Virginia Lively.

Debating on whether or not to present your future spouse with a prenuptial agreement can be a hot button issue. Nothing is more romantic than planning for the possibility of divorce before your wedding day. If you are the type of person that would like to have protections regarding your property, but do not want a full-fledged prenuptial agreement, there are many options available to you. Since in California we run a community property system, acting upon these options are necessary to ensure that your separate property stays separate.  Community property is all property, real or personal, wherever situated, acquired by a married person during the marriage while domiciled in this state. (Cal Fam Code § 760).  Separate property is all property acquired before marriage or during marriage by gift, bequest, devise, or descent, including the rents, issues, and profits of the separate property. (Cal Fam Code § 770).  As a married person, however, you can generally maintain your own “separate property” by making sure it literally stays separate and doesn’t mingle with anything community.

Separate Property Inventories: the best way to ensure you have adequate accounting for your separate property assets is to keep an inventory of them. You would identify the property you are bringing into the marriage and identify the rents, issues, and profits from them. Think of this as a proactive tracking and accounting of what you have.  While this task is time consuming, it would be helpful to identify the fair market value of each item you are listing as well. In case there is any appreciation in value of your property, your spouse may have a claim to some reimbursement to that appreciation, discussed more later. This inventory does not need to be limited solely to property you acquired prior to marriage. You can update this list during the marriage by identifying any property you received as a gift, devise, bequest or descent. As noted above, property in these categories are also your separate property whether or not you are married at the time you receive it. Id.

Separate Funds: Keep your non-marital funds separate. The best way to generally ensure your marital funds are separate would be to keep any money you earned before marriage, or inherited at any time, in a bank account separate from your spouse’s. Obtaining a sole account in your name gives only you access to the funds in the account and the ability to obtain information from the account. (Carillo, supra at 38-39). Any earnings you receive during marriage should go into another account, either another sole account or a joint account with your spouse. Any earnings you receive during marriage are community property barring an agreement between you and your spouse.  This includes any expenditures of time, talent, and labor. (In re Marriage of Dekker, 17 Cal. App. 4th 842, 850, 21 Cal. Rptr. 2d 642, 647 (1993)). When your community property earnings are combined with you separate property earnings it results in “commingled” funds. (Carillo, supra at 79). Courts would need trace the funds back to both separate funds and community funds to determine their contribution to the purchase and thus their entitlement to reimbursement. Keeping funds separate saves a lot of time and confusion and is more likely to result in those funds being treated as your separate property later than if the funds have to be traced.

Real estate: Keep your real property separate from your spouse. One example: purchasing a home before you met or were married to your spouse. If you want that property to remain solely your separate property then you would refrain from adding your spouse’s name to the title of your home. Having joint title on the deed of your home raises a presumption that the property is community property. (Cal Fam Code § 2581). In addition, you would also need to maintain the home solely with non-marital funds. This could be done with money you earned before marriage or an inheritance because these are your separate property, as defined above.

Separate Business: Obtain a valuation of your separate business prior to marriage. The value of your business at divorce will likely be higher than before marriage and would be subject to the community property presumption. Any community contributions to this increase will be entitled to some reimbursement at divorce. (In re Marriage of Dekker, 17 Cal. App. 4th 842, 851, 21 Cal. Rptr. 2d 642, 647 (1993)). The problem is, if you did not obtain the value of your business before marriage, your spouse may receive more than he or she is actually entitled to receive or actually contributed to the business growth. For example: your business was valued at $100,000 on the date of your marriage and worth $500,000 on the date of your divorce. Your spouse would be entitled to $200,000 which is half of the appreciation (or difference between the two valuations). If you did not receive that initial valuation, the court could end up valuing it at less than its actual value at the time, and your spouse would receive more.

If you have an issue concerning your separate property rights, please contact one of the experienced attorneys at Lonich & Patton. We offer a free half-hour consultations.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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Posted March 19, 2018 in Family Law by Alexis Revelo.

Establishing paternity can be an overwhelming time for many parents. There are many situations in which a want or need to establish paternity arises from. One example being a child born out of wedlock, or during a time where the two parents were not married. Even if unmarried, the two can sign a voluntary declaration of parentage at the child’s birth in order to identify them as the mother and father. However, in some cases of children born out of wedlock, the mother may even omit adding the father’s name on the child’s birth certificate. When this happens, it is not hopeless to identify and establish a man as the father later on. The man hoping to establish himself as the child’s father, or even the mother, may file a petition with the court for a paternity judgment. There are many reasons why a parent may want to establish paternity.

First, it is usually, but not always, in the child’s best interest to have both a mother and father figure in the child’s life. Studies have shown that a good working relationship between mother and father are vital to a child’s emotional well-being and results in positive relationships and fewer behavioral problems. (41 Fam. Ct. Rev. 354). If the child has gone many years without knowing the identity of his biological father, it may also give him a sense of relief to finally receive this information and a part of his identity he had not known. Second, establishing paternity can hold a father of a child accountable for support, whether it be emotionally or financially. If a father has been resistant to claim a child as his, establishing this paternity judgement can ensure that he is held responsible for his duties as a father. Third, it could allow a father to be present in a child’s life when the mother is resisting. Lastly, it can allow the child to claim inheritances and social security benefits.

To enable a child to reap these benefits, parentage must be established. As noted above, there a few methods to do so. One option is to sign a voluntary declaration establishing parentage. Usually at birth of the child, the person responsible for registering live births shall offer to the mother, and to the person identified by the mother as being the child’s father, a voluntary declaration of paternity for the two to sign. (Cal Fam Code § 7571). This declaration will hold the same weight as if you had gotten a judgment of parentage in court. (Cal Fam Code § 7573). If signing a declaration at birth was not an option for you or was not done, a voluntary agreement can still be drafted and signed establishing you both as parents later on. The declaration would need to be executed on a form developed by the Department of Child Support Services in consultation with the State Department of Health Services, the California Family Support Council, and child support advocacy groups. (Cal Fam Code § 7574). It will then be signed by a judge and filed in the court.

To get a paternity judgment by a judge, you would need to file a parentage case with your local superior court. Only the child, the child’s biological mother, the presumed father of the child, an adoption agency who has the child, or a prospective adoptive parent may file an action for paternity. (Cal Fam Code § 7630). A presumed father is one who was married to the child’s biological mother when the child was born, there was a valid attempt to try to marry before the child’s birth, they married or attempted to marry after the child’s birth, or one who receives the child into his home as if the child is his. (Cal Fam Code § 7611). There are many forms to file to open a parentage case with the court, so it is advised that you reach out to an experienced attorney to help you. Once forms are filed, the other parent has thirty days to respond to the petition or else it is defaulted. If the other side does respond within that thirty days, they will likely contest the petition and ask the parties to submit to a blood test.

The court may, on its own or because of a motion to the court, order a mother, child, and alleged father to submit to genetic testing to establish paternity. (Cal Fam Code § 7551). So that both parties can feel confident about the results of the test will be accurate, it is required that the genetics testing is done by a laboratory approved by the United States Secretary of Health and Human Services. (Cal Fam Code § 7552). If it is determined that he is not the child’s biological father, then the court will resolve the matter accordingly. (Cal Fam Code § 7554). If, however, it is determined that the man is indeed the child’s father then he will have the same obligations and responsibilities to the child as if the issue of parentage was not even raised.

If you have an issue concerning issues of paternity or your rights as a parent, please contact one of the experienced attorneys at Lonich & Patton. We offer a free half-hour consultations.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results. While this post may detail general legal issues, it is not legal advice. Use of this site does not create an attorney-client relationship.

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Posted March 9, 2018 in Estate Planning by Michael Lonich.

Some say, “if there is a will, there is a family fighting over it.” But a brawl between loved ones isn’t necessary if these 6 tips are followed.

1. Make A Plan!

You do not want to leave uncertainty and confusion for your loved ones when you pass. Do not take a “they will figure it out” approach. This is most likely lead to confusion, conflict, and possibly court. Be detailed in your wishes and instructions. If you fail to be clear or make a plan all together then it will be up to the court in deciding who is given what.

There are several options available when deciding an estate plan and what is best for your best friend may not be best for you. Therefore, it may be wise to meet with a knowledgeable estate attorney who can guide you through your planning options.

2. Update On The Regular

Once you make a plan – keep it updated. This does not need to be a weekly event, but it does need to happen when there is a change in life circumstances. These events may include: a divorce, a marriage, change in property ownership, or having a baby.

3. Do Not Rely On Family Utopia

Even if your family gatherings are like a glimpse into Utopia itself, do not rely on everyone agreeing all the time. Life is complicated and constantly changing. Therefore, if a child’s life circumstances change their goals may no longer align with everyone else’s. Change is normal in life and your estate plan should reflect that.

4. Communicate

You are not required to talk to your loved ones about your plans, but this tip is encouraged. Family input may be beneficial and it will lessen the chances of someone being surprised later on. It is also important to communicate in order to have everyone on the same page regarding issues such as: plans for a disabled child, the succession of the family business, or for the continued enjoyment of a vacation home. Although it may be an awkward conversation, it is important to have these discussions.

5. Remove Assets From Probate

Probate is something most people try to avoid and if you want your loved ones getting the most from what you left them, you will too. Two common ways to avoid probate is through revocable trusts and beneficiary designations. Another way to help avoid probate is to make sure the named beneficiaries in other asset documents are consistent with your whole plan. However, once again, it is important to discuss what estate plan options are best for you with an attorney – a revocable trust may not be it and you may be able to avoid probate through other avenues.

6. Consider Someone Outside The Family In Charge Of Assets

Some good choices are a law firm or trust company. By naming someone not in the family, it will help reduce the risk of disharmony. It is crucial to make a smart choice in appointing a Trustee and Agents under Powers of Attorney. You should not make this decision based solely on who is your favorite to hang out with. There are a multitude of factors to take into consideration and you should speak openly with your attorney to decide who would be best for the position.

If you are considering creating an estate plan and would like more information, please contact the experienced family law attorneys at Lonich & Patton.

Lastly, please remember that each individual situation is unique, and results discussed in this post are not a guarantee of future results.  While this post may detail general legal issues, it is not legal advice.  Use of this site does not create an attorney-client relationship.

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