Articles Posted in Property Division

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Stars of the hit Food Network show Down Home with the Neelys, Gina and Pat Neely are getting divorced after twenty (20) years of marriage. Gina and Pat were high school sweethearts and have built a family brand consisting of products and restaurants across the United States. The Neely’s show Down Home with the Neelys is a cooking demonstration show that features the fun banter between husband and wife. Gina and Pat’s careers are so carefully intertwined with their relationship as a married couple that they will each have to pursue a new path after separation. In addition, the Neelys will have to divide up the empire they established throughout their twenty (20) years of marriage.

According to media reports covering the Neely divorce, the Neely’s were on the verge of separation when they were discovered by the Food Network and offered their own show in 2009. The Neelys were surprised when the show became a fast hit and decided to ride the wave out and garner fame. Pat Neely believes that his former wife will not sustain the same level of success after their separation because he was the only trained chef and because most of the recipes the couple featured are owned by his family. Gina plans to branch out and develop her own brand of Green Giant products.

Although the Neelys are getting a divorce, they do not plan to sell their popular barbeque restaurants. If the parties to a divorce reach an agreement regarding asset division outside of the courtroom, they have the ability to craft creative terms that fits the best interests of both parties. In the Neely divorce, the parties will be able to create a marital settlement agreement that allows them to keep their restaurants in tact while dividing responsibilities and income accordingly. The lawyers will have the difficult task of drafting appropriate enforceable provisions that allow the parties to continue to jointly own their restaurants.

When divorcing parties want to work towards an agreement whereby they continue to jointly own an asset after separation, an experienced family law attorney will carefully discuss the pros and cons of that arrangement with his or her client. While it will seem appealing for the parties to keep their assets in tact and still reap the profits, it can become complicated when the relationship changes between the parties. Depending on the level of animosity and the level of involvement necessary for the parties jointly own an asset, it may or may not be beneficial for a divorced couple to jointly retain property. One possible solution to the issues that arise when divorced parties who wish to jointly own an asset is to create an arrangement where the parties have the least amount of interaction possible. Overall these agreements can be successful if they are drafted properly and each party clearly articulates his or her expectations.
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The family residence is sometimes the parties’ biggest asset acquired during marriage. It is also typically an asset that one or both of the parties feel very attached to. When going through a divorce, the parties will have to decide whether to sell the house, continue to co-own it or have one spouse keep the house and “buyout” the other spouse’s interest in the house. A “buyout” is typically an attractive option when there are kids involved and the parent staying in the house wants to continue to provide continuity and stability for the kids. It is also an appealing option if the market conditions don’t favor the seller at the time. To “buyout” the other spouse means that the house will be assigned a certain value and the spouse not keeping the house will instead receive a percentage of the that value less the debt. The buying spouse either pays money to the selling spouse or gives up other marital property in the amount of the selling spouse’s share. Thus, the fair market value of the home makes a big difference on how much the “buyout” will cost the selling spouse.

There are a few different ways to value your marital residence. It is important for the valuation to be as fair and accurate as possible. Typically parties either get the residence appraised, have a realtor do a comparative market analysis or the parties do individual research based on online websites.

If the parties choose to value the home based on individual research, they will typically use an online website such as Zillow.com or Eappraisal.com, which gives immediate estimates of the home’s value. The parties can also ask a real estate agent to perform a Comparative Market Analysis, for little or no cost, which provides information about recent sales prices of comparable houses in the neighborhood. Then you can you’re your home’s value on those comps.

However, not all houses are the same, and thus comps and online websites are not always the most accurate way to determine the fair market value of a house. Instead, the most accurate way to determine the fair market value of a house is to have an appraisal done by a neutral and licensed appraiser. Of course this method will cost the parties a small chuck of change. The parties can either agree on a joint appraiser and perhaps split the cost, or they can each pay to have their own appraisers do an appraisal and split the difference between the fair market value. The cost of an appraisal is usually worth it to make sure that you are using an accurate number to value your home and thus calculate the buyout amount.
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Thinking about or talking about the possibility of divorce is very different than actually taking affirmative steps to file for divorce in Family Court. Moving forward with this step can take a significant amount of mental and emotional strength. If you’re still in the thinking or talking stages of a potential divorce, ask yourself the following questions to help determine if you are ready to take the next step and file for divorce from your spouse.

1. Are you Facing a Hard or Soft Problem?
The need for a divorce may be more immediate if you are in a situation where you are facing a “hard problem” as marital therapists like to call it. “Hard problems” include situations in which you are facing abuse from your spouse or your spouse has an untreated addiction. If this is the case, you may want to act fast and stop just dwelling on the possibility of divorce. However, if you are facing a “soft problem” maybe you need more time to decide if you and your spouse can work on the problem or if a divorce is the preferable option. “Soft problems” include things such as feeling as if you’ve grown apart from your spouse, that you’re unhappy in the relationship or that you aren’t in love anymore.

2. Are You and Your Spouse Even Compatible?
What are your odds of succeeding as a married couple? Perhaps taking a “Rate Your Mate” quiz (http://www.divorcenet.com/interest/rate-mate-compatibility-divorce-test.htm) will help you determine if you’re destined for doom, in which case you might as well just go ahead and prepare those divorce papers. The “Rate Your Mate” quiz tests areas such as common interests, money, mutual respect and personal safety, which are common issues that many couples face.

3. Should You Stay Together for the Kids?
There are two opposing schools of thought: 1) stay together because divorce is destructive to children; or 2) get a divorce because if the parents are happier the children will ultimately be happier. If you are contemplating divorce and you have children with your spouse then you should think about whether it’s in your children’s best interest if you stay with your spouse or split. Many couples prefer to wait until their children have turned 18 and left for college before they decide to get a divorce. But if your children are young, this might not be a realistic option for you. Also, if your marriage is filled with havoc and constant fighting then staying together for the kids might actually be hurting, rather than helping your kids.

4. Are You Ready to Part With Some of Your Stuff?
Your house, your cars, your furniture and furnishings…these are all things that were likely acquired during your marriage and will be subject to division during a divorce. Getting a divorce means parting with some or all of these “things” in order to divide assets with your spouse. For instance, in many divorces, where one party cannot afford to keep the home and “buy out” the spouse, the family home will need to be listed for sale. Even though you can likely negotiate with your spouse to keep certain items or assets, you will need to accept the reality of parting with some of your stuff. If this idea seems too traumatic for you then you should re-evaluate whether or not a divorce is the route that you want to take.
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Looks like the second go around didn’t work out for former Baywatch star, Pamela Anderson, and husband Rick Salomon. The couple married for the first time in 2007 and were together only a couple of months before getting an annulment. Then this past October Pamela revealed that she was seeing her ex-husband again. By January 2014 the couple was married again. However a mere six months later their married has fizzled yet again and they have filed for divorce based on “irreconcilable differences.”

Anderson and Salomon aren’t the first couple to marry each other twice and file for divorce twice. In fact, this situation isn’t all too uncommon these days. However, one question that divorce attorneys are often asked is what is the length of marriage when couples divorce, remarry and then divorce again? Are the lengths of the two marriages added together? Or are each of the marriages treated completely separately for purposes of determining the length of marriage?

Determining the length of marriage is important in divorce cases because it is used to help calculate the length of a spousal support award and also to figure out what is community property (property acquired during the marriage) versus separate property (property acquired before marriage). Spousal support, in particular, gets a bit complicated when the parties decide that they want a second divorce from each other. The Court might add the length of the first marriage to the length of the second marriage for purposes of determining the “length of marriage”. Or the Court might determine that just like cohabitation prior to marriage is not considered when calculating a couple’s length of marriage, a party’s previous marriage to the same person should not be included in the length of marriage calculation.

In the case of In re Marriage of Chapman, the parties married in 1960, divorce in 1981, reconciled and separated on and off for three years and then remarried in 1982. The second marriage ended after only 3 ½ months. (191 Cal.App.3d 1308). The trial court held that the length of marriage was only 3 ½ months and consequently ordered a brief period of spousal support. However, Wife appealed and the appellate court held that the parties’ 1st marriage of 19 years could be considered by the trial court in determining spousal support. The court reasoned that it would be unjust to not consider the entire marital history of the parties because of the brevity of time between the end of the first marriage and commencement of the second marriage, the collective length of their martial relationships and the uninterrupted nature of Husband’s legal responsibility to support Wife. The Court further reasoned that if only second marriages are taken into consideration then it would create an incentive for the spousal support payor to convince his/her ex-spouse to remarry and then quickly divorce him/her again.

Remarrying your ex-spouse for a second time doesn’t always mean that the court will consider the combined length of both marriages. In the case of In re Marriage of Bukaty, for example, the parties were first married for 12 years, then remarried each other 27 years later for a period of only 19 months. (180 Cal.App.3d 143). The Court in that case determined that spousal support should be based on the length of second marriage only.
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During a divorce, a judge, a mediator or the parties will make decisions regarding how to divide the marital property, like the residence, the vehicle, savings accounts, and stocks accounts. But what about the couple’s digital assets, like their iTunes music library, MP3s, Kindle eBooks library, etc.? These assets aren’t exactly tangible, yet they may still be considered martial property subject to division during a divorce.

Digital assets are comprised of intangible goods such as digital books, music and movies. These are most typically stored in iTunes accounts or other MP3 storage accounts and Kindle eBook accounts. Digital assets can even include digital storage, social media accounts and blogs. These digital assets raise the question of whether they are subject to division during a divorce and whether or not they can be valued.

Although there is not much law on this subject, when it comes to the division of digital assets, many states will divide the digital assets using an “equitable distribution” system to divide, allocate and value these assets. The “marital property” will be assigned a value and then it will be distributed equitably, or fairly, between the spouses. Such division does not always result in a 50/50 split, but rather it is what is considered a fair split.However, just like a car cannot be split in half, neither can many digital assets. Additionally, unlike the ownership of a car which can typically be transferred quite easily to the other spouse, transferring ownership of digital assets is not always feasible. In fact, some user agreements do not even allow for transferring ownership. A judge’s ruling will not even supersede these user agreements. To resolve the issues that division of digital assets pose, the spouse who owns the iTunes and Kindle libraries may be awarded them, while the other spouse may be awarded a different asset in leui. Another option is for the spouse who is awarded the asset to “buy-out” the other spouse based on the value of the asset awarded to him/her.

Although the division of digital assets is a relatively new area of the law, as more digital products continue to develop, I suspect that divorce attorneys will see a lot more issues involving digital assets and thus a lot more law on the topic.
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When going through a divorce, there are a lot of decisions that need to be made. Who will get the house? Who will the kids spend the holidays with? Who keeps the beloved family pet? These and many more questions will come up throughout the divorce process and will require either you and your spouse or the Judge to make a decision. One decision, however, that will be up to just you (and hopefully with the cooperation of your spouse) is whether to litigate or mediate some or all aspects of your divorce.

It’s common to want to take everything to trial when there are a lot of fuming emotions between you and your spouse. Many spouses feel that if they litigate their case, it will act as a type of revenge against their spouse. However, before you shut your eyes to the option of mediation or otherwise settling outside of court, here are a few things you might want to consider:

Money, Money, Money! Can you really afford the expense of a trial? If you have sufficient funds in your back pocket to fight your case and you aren’t in a hurry to get the divorce over with then ligation might be the avenue you want to take. However, keep in mind that it is very likely that the cost of going to trial will be greater than the amount of money you would lose by agreeing to your spouse’s settlement offer. This doesn’t necessarily mean that you need to agree to an unfair offer just to avoid trial on the issue. Such a decision really requires a cost-benefit analysis. If you are on the fence, your divorce attorney can walk you through the pros and cons of settling an issue outside of court or taking it to trial. It’s important to look at the big picture and decide if a $1,000 issue is worth possibly spending $10,000 in court to fight over or not.

Can you handle the heat?! Can you and your family withstand the immense amount of stress that comes with a trial? Litigation can be not only financially draining but also emotionally draining. You aren’t only putting an immense amount of stress on yourself, but also those who are standing by you throughout the process (your children, your family, your friends). However, some issues are simply worth the stress. For instance, if you are fighting for custody of your child, the stress of a trial is minor compared to the stress that you could potentially endure in the future if not awarded custody.Risk Taker or Risk Averse? How much are you willing to hand over control to a Judge? When going before a Judge there is no guarantee as to whether or not he/she will see things your way. So even if you think the Judge’s decision is unfair, it will be final (unless there are grounds for appeal). If you are willing to take that risk then go for it. But if you are more risk averse you may want to consider the benefits of settling with your spouse outside of court.
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Until just recently, there were not any California cases on point regarding whether a licensed professional’s book of business (i.e. list of clients) is something of value that should be considered an asset subject to property division during a divorce proceeding. However, the Fourth Appellate District’s recent decision in In re the Marriage of Mark and Rhonda Finby finally shed light on this issue.

In other jurisdictions, courts have held that licensed professionals’ customer lists generally constitute divisible property during a divorce. In the New York case Moll v. Moll, for example, the Court held that clients serviced by a stockbroker constitute a marital asset because the thing of value is the stockbroker’s personal/professional goodwill. Also in the Florida case Reiss v. Reiss, the Court held that clients that were brought to a new securities firm by a stockbroker constitute a marital asset subject to division.

Similar to the holdings in other jurisdictions described above, in the recently published case In re Marriage of Finby the Fourth District California Appellate Court reversed the trial Court’s decision and found that a book of business that a financial advisor developed during the marriage constitutes an asset that has value and is thus subject to division during a divorce proceeding.As background, in In re Marriage of Finby, the Wife worked as a financial advisor and developed a list of clients (who owned over $192 million in investments) during marriage that she referred to as her “book of business”. Wife left her previous employer and went to work for Wells Fargo, who paid her over $2.8 million as a transitional bonus. Although Wife argued that her book of business did not have value because she could not sell it, the Appellate Court found that it was a valuable asset, reasoning that her book of business was essentially consideration for Wife’s transitional bonus. In other words, Wife was granted the option to earn a significant amount of money based on her work during the marriage of acquiring a book of business. The Court further reasoned that Wife’s ability to transfer her book of business by bringing her clients to Wells Fargo is similar to goodwill, like that which is found in the business of other professions (e.g. lawyers and doctors). As a result, the Court found that the community had an interest in a portion of the transitional bonus and remanded it back to the trial court to determine exactly how much of an interest should be apportioned to Husband.
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In general, family courts disfavor “bad actors” or spouses who take deliberate steps to disadvantage the other party in anticipation of or during a divorce proceeding. Spouses owe each other the highest duties of good faith and fair dealing – even throughout the divorce process. Specific family law codes were enacted to require spouses to be completely transparent with each other regarding their income, expenses, assets, and debts. This same spirit applies to cases involving disputes over the date of business valuation.

It is not uncommon for the divorce process to drag out for months or even years. The length of the process is dependent on many factors including the complexity of the parties’ estate. When one or both parties own a business that business will likely need to be valued prior to the conclusion of the case. As a default rule, assets (including businesses) are valued as close as possible to the time of trial. In a particularly long divorce case, the business may have a substantially different value at the parties’ date of separation as opposed to the date of trial. One way for a spouse to overcome the general presumption that a business should be valued close to the date of trial is a showing of “bad behavior” by the other spouse.

Failure to Cooperate in Discovery: In divorce cases, family court encourage open discovery of information and documents regarding all assets, including businesses. If the spouse managing the business fails to cooperate in producing pertinent business records the court may decide to value the business at the time proposed by the other spouse. Spouses are not permitted to benefit from confusion intentionally caused regarding the facts of the case.

Commingling Business Operations and Poor Record Keeping: California family courts have also selected an alternative date of valuation in cases where the spouse managing a business so intertwined pre and post-separation operations in poor record keeping that it was impossible to determine the date of separation value even though the court otherwise would have done so.

Breach of Fiduciary Duty: As stated above, spouses owe each other the highest duty of good faith and fair dealing. A violation of that duty can result in a date of valuation aimed to punish the offending spouse. For instance, if a spouse mismanages a business he or she may have to brunt the consequences of the mismanagement entirely as a result of the date of business valuation chosen by the court. California courts have also held that neglecting fiduciary duties could be grounds for an alternative date of valuation.
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Many couples in San Diego opt to mediate rather than litigate their divorce. Mediation can provide the parties with many advantages unavailable in litigation such as customized agreements and quick results. One of the most popular motivations for mediating a divorce is to minimize the attorney fees and costs associated with litigation preserving as much of the parties’ estate as possible. Spouses who litigate their divorce without attorneys often feel apprehensive regarding the process and hesitate to reach agreements. Below is a list of things spouses can do to prepare for their first divorce mediation session without an attorney present.

Get Organized: You can maximize the productivity of your mediation session if you come prepared with organized financial documents regarding all of your assets and debts. It may also be helpful to make a list of all of your assets and debts to present to the mediator. For support purposes, the mediator will also need proof of income for both you and your spouse. You should bring recent tax returns and current paystubs to the mediation.

Prepare Emotionally: Mediation is not the time to express all of your anger and frustration for your spouse. Emotional outbursts and cruel, hurtful, or sarcastic comments can derail the mediation process. Before mediation try to create a list of your goals and consider what is most important to you. If you start to get upset during mediation refocus yourself on your goals.Prepare Negotiation Points: A mediation session is a negotiation facilitated by a neutral third party. The mediator will help you negotiate with your spouse and a list of prepared negotiation points will assist the process. Remember mediation is centered in negotiation, not argument. Avoid arguing with your spouse during mediation by refocusing on your negotiation points.

Familiarize Yourself with the Process: You can speak with the mediator and/or his or her office staff regarding the mediation process prior to your formal session. If you are familiar with the process you will learn that you have the ability to speak with the mediator privately during the mediation session. This means that if you have concerns that you do not want to share with your spouse, you have options. Prior to mediation, you can consider if you have anything you would like to share privately with the mediator.

Meet with a Family Law Attorney: A family law attorney can consult with you while you are going through the mediation process. Notably, an experienced family law attorney can evaluate your case from a litigation standpoint and explain your legal rights before you enter into any negotiations. Further, once you have reached what you think is an equitable resolution with your spouse during mediation; you can bring a copy of the agreement for your attorney to review prior to signing it. This way you can rest easy that your settlement is fair and reasonable.

Create a Budget: You should walk into mediation with knowledge regarding how much money you spend on a monthly basis and how much money you will need to pay your living expenses. This information will be crucial to both property division and support discussions and will provide you a basis from which to negotiate from.
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You may remember our previous blog highlighting the celebrity divorce of Bethenny Frankel, founder of SkinnyGirl Cocktails, and Jason Hoppy. Well, their bitter divorce battle continues to grab entertainment headlines, which report that the soon to be ex-couple is actually still living together in their five million dollar New York City apartment with their 3-year old daughter, Bryn. As if a divorce isn’t already stressful enough, try living in the same household as your soon- to-be-ex while going through the often long, drawn-out divorce proceedings. Frankel tells PEOPLE, “My living situation is very, very stressful…I don’t think it’s very healthy for anyone involved. It’s very upsetting. You just have to endure it.”

It may seem puzzling why Frankel would continue to endure the stress of sharing an apartment with her soon-to-be-ex when she can clearly afford to move into her own place and not have to face Hoppy on a day-to-day basis. Perhaps her reasoning is related to two main concerns related to moving out of the marital home while the parties are going through the divorce process. The first concern is whether moving out of the home will affect a party’s claim to ownership when assets are being divided down the road. The second concern is whether moving out could adversely affect a party’s standing in his or her battle for primary custody of the child or children.

The martial home is likely a significant asset, if not the most significant asset in many divorces. So it’s reasonable that divorcing spouses would worry that “abandoning” the home would make it more difficult for the one who leaves to make a claim on the property in a divorce settlement. If both claim ownership of the home then would that ownership be jeopardized if one party moves out? As California divorce attorneys know, if the home was acquired during marriage then it remains a marital asset subject to distribution regardless of who remains in the home during the divorce process.

If money is not an issue, then many divorce attorneys often advise clients to physically separate when going through a divorce, which usually means moving out of the marital home. A little distance can often times do a world of good for parties who are going through the divorce process. However, when a party does decide to move out of the marital home, there needs to be some serious discussions about the status of the marital residence. Aspects that need to be addressed include: the care, maintenance and financial obligations regarding the home in the interim, items left in the home, and whether the party left in the martial home will have exclusive use and possession of the home. The parties and their divorce attorneys need to discuss the whether the spouse who remains in the home has an expectation of privacy or if the spouse who moved out will be entitled to some use or enjoyment of the home after moving out.

Another concern regarding moving out of the marital home is with respect to child custody. Since both Frankel and Hoppy want primary custody of their daughter Bryn, they might be concerned that moving out of their NYC apartment could adversely affect their standing in their battle for primary custody. Until a parenting plan is in place, “abandoning” the marital home could indicate that parent’s lack of interest in the child’s daily life if the child remains in the marital home with the other parent. This concern can potentially be resolved by establishing an interim custody schedule which ensures that the parent leaving the marital home will have frequent and continuous access to the child. The parent who moves out could also have his or her divorce attorney argue that the purpose of moving out was to reduce ongoing marital conflict out of concern for the child’s well-being throughout the divorce proceedings.

Nonetheless, many San Diego divorce attorneys will generally advise clients with custody disputes to just stay in the marital home together if possible, like Frankel and Hoppy are doing. First, it helps to avoid creating a potential new status quo regarding the “primary residential parent” where the divorce process is taking an extended period of time. And second, when the parties continue to live together under the same roof emotions tend to get heated. As a result, there may be more incentive to conclude the divorce quicker by negotiating a divorce settlement.

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