There are many great companies in San Diego. A lot of these companies offer fantastic employment benefits, such as generous amounts of vacation time. Some companies even have policies allowing their employees to accrue vacation time, as opposed to a “use it or lose it” policy. As a San Diego divorce attorney, it is important to understand this employment benefit, which is often overlooked when bigger benefits are also at stake, such as stock options, 401(k)’s and pensions.“

Vested vacation time is an asset which, if earned during marriage, is considered a community property asset. However, vested vacation time is, in and of itself, not divisible in kind. If there are 30 days of vested vacation time, the judge cannot award 15 days of vested vacation time to each party because the vacation time that is vested can only be used or taken by the employee spouse. To make the issue of vested vacation time even more complicated, there is conflicting case law on how the courts handle the division of vested vacation time.

A close reading of the various cases, in my opinion, favors that if the vested vacation time is convertible (or can be converted) into cash, then it can be considered by the court as a divisible community property asset. Thus, the employee spouse who can elect to take his or her accumulated vacation time as cash may be charged with the after-tax amount he or she could realize. The court can also order a party to cash in the vested vacation time and pay one-half (or other amount) to the non-employee spouse.

On the other hand, if the employee spouse must take the time off or lose it, and there is no cashing out of the vacation time, then the court could find that the employee spouse is not receiving an economic benefit which can be fairly valued and charged to that party. In other words, if accrued or vested vacation time can be cashed in, it should be considered an asset subject to division. If it, or a portion of it, cannot be cashed in, meaning that it must be taken or lost, then the court may determine that it has no economic benefit to the employee spouse and the court will not consider it as an asset subject to division.

In one “vacation benefit” case, Husband had accumulated 120 hours of vacation time through his employment, for which he would not receive cash if he did not use. The Trial Court found that the vested vacation time was an asset not subject to division. The Court of Appeal affirmed the decision, holding that the mere fact that a benefit exists for an employee, doesn’t mean that a value can be placed on it in a dissolution proceeding. These include: use of employer provided health club, purchasing meals in company cafeteria, or ability to buy at discount prices through employer subsidized retail establishment. Although these benefits may affect need or ability re support, they are not convertible to cash and therefore not divisible on dissolution.

However, another case held just the opposite. When that Court of Appeal considered that Supreme Court’s meaning of the phrase “vested vacation time” it believed that it was important to keep in mind the nature of vacation pay. The court went on to explain that vacation pay is not a gratuity or a gift, but is, in effect, additional wages for services performed and that the right to a paid vacation, when offered in an employer’s policy or contract of employment, constitutes deferred wages for services rendered. That Court of Appeal held that there was no reason deferred wages cannot be commuted to present value and divided.

Even if the vacation time cannot be valued and divided, the vacation time may still be taken into consideration by the court when determining spousal support. The fact is that the paid vacation time (and other similar employment benefits) reduces the employee’s reasonable living expenses and thus can be considered by the court in exercising its discretion as to the amount of spousal support to order.
Continue reading

Few people would agree that there is a good time to get divorced. It can be a long, drawn out process and complex. Not only that, but it can lead to overwhelming stress and problems with other family relationships if not handled well.

A new article published on MSNBC.com by Investopedia looks at the best and worst times to consider a divorce in San Diego. Many people are struggling financially right now because of the effects of the Great Recession. Some people have the desire to get a divorce, but feel as if they can’t afford it and stay together in order to save money.That can lead to volatile situation that can lead to domestic violence issues as tempers flare, egos are bruised and feelings hurt. Even if you think your finances prohibit you from getting a divorce, it would be prudent to set up a consultation with an experienced San Diego Divorce Lawyer to discuss your options and talk about your situation.

Here are some events that can impact a divorce:

An up and down real estate market: At one time, a house was a major asset that couples might fight tooth-and-nail to obtain, but times have changed. According to foreclosure tracking site Realtytrac, every zip code but one in San Diego has “high” foreclosure activity level, with nearly 1 in every 147 housing units in foreclosure.

San Diego, like many parts of the country, has seen housing prices drop as foreclosures saturate the market, leaving many people upside down on their mortgages. For that reason, a house in a divorce may be less of an asset and more of a debt that must handled. While in past divorces, one spouse may be awarded the house and the other spouse would be awarded other assets in exchange, now the other spouse may have to give up assets if an ex agrees to take on an upside-down house.

A shaky economy: With the economy slowly recovering (and some would argue slowly is an exaggeration), many people are hurting financially. Going through a divorce at this time can be difficult.

A poor credit score: A bad credit history coupled with a divorce can be bad news for a person going through the process. Having to obtain a car loan or perhaps rent a house on your own can be more difficult without the added security of a second income or a house that may already be paid off in full. Again, a trusted attorney will be invaluable in assisting you in avoiding the common pitfalls of the divorce process.

If one of the two spouses has a bad credit score, negotiating to keep the car or house to avoid having to venture out for a loan may be prudent.

Minor children: Divorce is more complex and stressful when children are involved. Child custody in San Diego divorces can make a divorce more contentious and more financially difficult. With two sets of living expenses instead of pooled money, each parent will have less to give to college funds and other expenses, but financial aid may be easier to obtain.
Continue reading

Many San Diego clients come from marriages where one spouse was the primary wage earner, while the other stayed home to raise the children. The stay-at-home spouse now worries that the divorce will leave him or her without long-term security. Even though in California, spousal income is community property and distributed equally, there is still a question of whether the division of property entitles the stay-at-home spouse to a share of the other spouse’s pension benefits or stock options. Below are some questions that clients often ask a San Diego divorce attorney.

Am I entitled to a share of my spouse’s pension benefits if he joined the pension plan before our marriage?

Generally, yes, per California Family Code section 2610. What matters is whether your spouse’s retirement benefits continued to accrue during the years you were married. If at the time of divorce, your spouse was eligible to retire, the court would use proration formula to determine your share of the benefits. The proration formula divides the years you were married and your spouse’s benefits accrued by the total number of years your spouse was part of the pension program. The result is a percentage that represents the community’s share of that pension.

Thus, if you were married to your spouse for 15 years and during thos 15 years your spous’s benefits were accruing, and if your spouse was employed and also accrued benefits from that same employer for a total of 30 years, the community’s share would be 15/30, or one half of the pension benefits, and you would be entitled to half of that, or one fourth.

What if my spouse is eligible to retire, but chooses not to? Does that affect how much I receive?

No, because your spouse’s pension benefits mature at the time he is eligible to retire, not when he actually retires.

What if my spouse is not eligible to retire at the time of our divorce?

You would still be entitled to receive half of the community’s share of your spouse’s pension benefits. Tthe court could issue an order for you to receive your share when your spouse is eligible to retire. Some divorcing parties may agree that the spouse with the pension may “cash out” the other spouse, but a court could not make this type of an order.

Do stock options work the same way as pension benefits?

Yes, in the sense that you receive a share of your spouse’s stock at the time it matures, or “vests,” based on the number of years you were married. The difference is in the way your share is calculated. The portion of community property is based on the intent of the employer who granted the option. If the court finds that the employer awarded the stock option to reward your spouse for past services, then it uses the Marriage of Hug formula, which calculates community property based on the date your spouse started working. If the court finds that the employer awarded the stock option to encourage your spouse to stay with the company, it uses the Marriage of Nelson formula. Marriage of Nelson calculates community property based on the date the options were first granted. While both formulas can be a little confusing, what matters is that the stay-at-home spouse is entitled to a portion of the stock option.

If my spouse receives severance pay, would I be entitled to a share?

There is no clear-cut rule for severance pay. Some have argued successfully that it is not community property because it replaces lost income the spouse would have earned after the divorce. Others have argued successfully that it is community property because it was paid for by employment during the marriage.

If you are in the middle of a divorce and have questions about pension benefits, stock options, and other retirement issues, find a knowledgeable San Diego divorce attorney who can prepare you for what to expect.
Continue reading

Many San Diego clients make the decision to divorce after decades of marriage. This means not only a painful separation after years of their lives being intertwined, but also facing a thicket of different property laws. First and foremost are California’s current community property laws, which get more complicated if the couple once lived out of state. Then there could be property laws from other eras that determine the division of property for each spouse.

If the couple lived in California throughout the marriage, their home, employment income, and any purchases made with the employment income would belong to each spouse equally. Only a gift, inheritance, or property owned before the marriage would be considered separate property. By contrast, in separate property states, the person whose name is on the title owns the property. If the couple were to divorce in one of the 40 separate property states, the result would be known as “equitable distribution”: a property distribution that is not equal, but based upon what each spouse contributed to the marriage. Yet if the couple moved to California and later divorced, our state treats much of the separate property as quasi-community property. Quasi-community property is simply property that would have been community property if the couple had lived in California. During the marriage, it is treated as separate property; but once the couple divorces, it is divided equally between the spouses, like community property.

This is the basic concept behind quasi-community property, but in reality, it is not so clear-cut. Couples who accumulated property over several years in another state may have lost or misplaced documents establishing the nature of the property — whether it was kept entirely separate, or was used for the family. Separate property used for family purposes has often been ruled to be community property in California. If it cannot be properly identified, one spouse risks losing significant assets that he or she would otherwise be entitled to. Without proper documentation, the only evidence of the couple’s history in their previous state comes from their own statements and those of family and friends. These statements may be based on faulty memory, or be otherwise biased and unreliable. In these situations, couples need an experienced San Diego divorce attorney to piece together as many records as possible until the most accurate situation emerges.

Couples divorcing after a long marriage may also be affected by laws that no longer exist today, but were relevant during the marriage. One such law involves transmutation of property. Transmutation is an agreement between spouses that community property will become one spouse’s separate property, or that separate property will become community property. Today, sections 850 through 853 of the California Family Code require that all transmutations must be expressly stated in writing by the spouse whose interest is adversely affected. However, until 1985, transmutations could be oral. That means that community property could have become separate property without any evidence other than one spouse’s declaration. Confusion over the true nature of the property could lead to battles between spouses over what was separate and shared, based on inaccurate memories. Some marriages may also be affected by the Married Women’s Special Presumption, which has not been valid since 1975. Property purchased in the woman’s name before 1975, without any indication of her marital status, was presumed to be her separate property.
Continue reading