If you are going through a divorce or a legal separation and find yourself negotiating spousal support, be especially careful before you accept the terms of the agreement. Modifying a spousal support obligation is not as easy as you may think. It's not as if you can simply walk into a court and ask the judge to modify the order based on the fact that your ex-spouse recently acquired access to funds. Unfortunately, the process is a little more complicated than that.

The test for modifying a spousal support obligation in California has always been whether or not there has been a "material change of circumstances." A material change of circumstances means a reduction or increase in the supporting spouse's ability to pay and /or an increase or decrease in the supported spouse's needs. Thus, it would seem obvious that grounds for a modification of support would exist anytime a party acquires access to retirement funds or if his or her assets significantly appreciate in value. Think again.

In a recently published opinion entitled "In Re Marriage of Dietz," the Appellate Court decided that the trial court erred by concluding that the accessibility and increased value of a retirement account, previously awarded to the wife in a stipulated judgment, constituted a material change of circumstances justifying a decrease in the husband's monthly spousal support obligation.

On the surface, this opinion seems to contradict the holding in In re Marriage of Schmir. In Schmir, the Appellate Court affirmed the trial court ruling that there were material changes of circumstances to justify modification of support after Ms. Schmir became eligible to withdraw funds from her retirement account without penalty. However, the Dietz case was decided after the terms of the parties' marital settlement agreement were scrutinized by the Appellate Court, which held that the trial court was required to give effect to the husband's and wife's intent, as expressed in the agreement.

The stipulated judgment that Mr. and Mrs. Dietz signed expressly acknowledged their expectations that the value of the subject retirement account might increase. The agreement stipulated that each party would receive one-half of the community property interest in the retirement accounts, including "any and all contributions made up to the date of separation, and any increase or decrease in value of such assets related to market conditions."

Based on this decision, it would seem prudent for anyone entering into a marital settlement agreement, containing a spousal support order, to insist that the judgment include a detailed list of future events that will constitute a material change of circumstances. For example, if the parties anticipate a penalty-free withdrawal from retirement funds at a future date, it should be specifically indicated in the agreement that the occurrence of such event will constitute a material change of circumstances.

The Dietz decision also serves to remind us that drafting a spousal support agreement can be a highly technical exercise that requires knowledge of all possible pitfalls. Through the years, the courts have created special rules pertaining to the amount, duration, modification, and tax consequences of spousal support orders. When negotiating spousal support, pay particular attention to the proposed terms of the agreement. As Mr. Dietz learned, the failure to do so can have severe long term consequences.

Written by: Donald P. Schweitzer

Posted by The Law Offices of Donald P. Schweitzer at 3:05 PM | Permalink | Comments (0)

*IF AUDIO STOPS PLEASE CLICK ON THE TIMELINE TO CORRECT THE ISSUE* On occasion California courts have to struggle with the issue of what constitutes income for the purpose of calculating child support. In a recent California decision entitled "Marriage of Rothrock," the court of appeal had to determine whether or not an uncharacterized personal injury settlement award that was paid into an annuity, constituted income for the purpose of calculating child support. In rendering its' decision, the court of appeal relied on the common law definition of income as well as a federal statute in determining that the monthly annuity did not constitute income. The court's use of the common law definition was somewhat new, in comparison to recent cases where the same issue presented itself. For a more detailed analysis of the court's decision, click onto the above presentation.

Posted by The Law Offices of Donald P. Schweitzer at 4:11 PM | Permalink | Comments (0)

There is always that person that thinks they know some trick that will allow them to escape accountability.  You know who I mean of course.  We all know this person.  He is the slick talking blowhard.   We will call him Mr. Blowhard for the purposes of this article.  Imagine Mr. Blowhard having to go through a divorce in which he will have to give half, of “his” hard earned property, to his wife. Mr. Blowhard will go to any length to avoid such a result.

It makes for an interesting case when Mr. Blowhard enters the divorce process.  His combination of limited legal knowledge and willingness to misstate the facts can turn a divorce proceeding into quite a spectacle.  This article shall focus on the circumstances of a void marriage and the likely thoughts that will cross his mind.

Some husbands, with knowledge that the marriage is void, think they have some sort of a prenuptial agreement that will allow them to escape spousal support, attorney’s fees and property division when things turn bad.  As an example, let’s use a situation in which the marriage is void because of a pre-existing foreign marriage or a foreign divorce that wasn’t quite completed. 

One fine day, Mr. Blowhard and his girlfriend decide to get married in the United States.  The girlfriend has not finalized her divorce in another country. Mr. Blowhard knows of the prior marriage or incomplete divorce, and assures his soon-to-be wife that everything will be alright.  “This marriage is from a foreign country,” he says.  “The government shall never know.”  All the while Mr. Blowhard is snickering to himself because he knows this marriage is null and void and he will never have to pay spousal support or be faced with other obligations should things go awry. 

Well, well, Mr. Blowhard, believe it or not, you are not the first ingenious legal scholar to concoct such a scheme.  In fact, the California Courts have dealt with this issue as far back as 1982, in the Recknor decision.  The Second District Court of Appeal held in this case that a husband that knows of a prior marriage, that nullifies the current marriage and that still holds himself out to be married, is estopped from denying the invalidity of the current marriage. 

Suddenly a light goes on in Mr. Blowhard’s head.  “Hold on,” says Mr. Blowhard. “I never even knew she was married.”  Again, Mr. Blowhard has used his limited legal knowledge incorrectly.  If Mr. Blowhard is able to show that he never knew of the prior marriage he still must divide his “quasi-marital” property equally.  On this point, I’ll cut Mr. Blowhard a break because the treatises even state that the answer is not clearly defined by the California courts. 

If Mr. Blowhard were to do his own research he would see that the California Courts have done everything they can to show that Mr. Blowhard still has to divide his community interest equally.  If Mr. Blowhard proves that he had no knowledge of the prior existing marriage, he is a putative spouse.  California Family Code § 2251 states that if one of the parties had not know of the invalidity of the marriage then that party is a putative spouse and the property acquired during the marriage, (quasi-marital property), shall be divided in accordance with Fam. C. § 2500.  When you read §2500 it states that all property must be divided equally.   

Feeling a bit disheartened, Mr. Blowhard?  Let me put it to rest for you.  In Marvin, the California Supreme Court considered the issue of the bad-faith spouse.  The Court stated that even in cases of a bad-faith spouse, the Court should still award the “guilty” spouse half of the quasi-marital property.  After all, if we were to define an “innocent” spouse as one that believed the marriage as being valid, then awarding the innocent spouse ½ of the property is not frustrating their expectations.

The Courts have been dealing with Mr. Blowhard types since the early days of English common law.  For the most part, all the schemes have been tried and the Courts have developed remedies for them.  This dynamic process of trial and error is what makes our legal system so special.

Written By Antonio J. Fricano

 

 

 

 

 

 

Posted by The Law Offices of Donald P. Schweitzer at 11:42 AM | Permalink | Comments (0)