Sunday, March 8, 2009
Family Code Section 4320 - Spousal Support
Note: Excerpts from two pertinent court of appeals cases are inserted in this transcript for further consideration and discussion with your attorney; they are not a part of the California Family Code.
Family Code Section 4320
In ordering spousal support under this part, the court shall consider all of the following circumstances:
......(a) The extent to which the earning capacity of each party is sufficient to maintain the standard of living established during the marriage, taking into account all of the following:
..........(1) The marketable skills of the supported party [your ex]; the job market for those skills; the time and expenses required for the supported party to acquire the appropriate education or training to develop those skills; and the possible need for retraining or education to acquire other, more marketable skills or employment.
..........(2) The extent to which the supported party's [your ex] present or future earning capacity is impaired by periods of unemployment that were incurred during the marriage to permit the supported party [your ex] to devote time to domestic duties.
......(b) The extent to which the supported party [your ex] contributed to the attainment of an education, training, a career position, or a license by the supporting party [you].
......(c) The ability of the supporting party [you] to pay spousal support, taking into account the supporting party's [you] earning capacity, earned and unearned income, assets, and standard of living.
......(d) The needs of each party based on the standard of living established during the marriage.
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In re the Marriage of RICHARD and BARBARA SIMPSON, No. B048099, COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION SEVEN, February 13, 1992, Decided: “After dissolution, a family may be entitled to be supported at what would have been a reasonable standard of living ... given what [Husband] would have earned had he worked at a reasonably human pace." … They are not entitled to continued guaranteed support at a standard of living which existed only because the supporting spouse ‘worked excessive hours during the marriage.’”
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......(e) The obligations and assets, including the separate property, of each party.
......(f) The duration of the marriage.
......(g) The ability of the supported party [your ex] to engage in gainful employment without unduly interfering with the interests of dependent children in the custody of the party.
......(h) The age and health of the parties.
......(i) Documented evidence of any history of domestic violence, as defined in Section 6211, between the parties, including, but not limited to, consideration of emotional distress resulting from domestic violence perpetrated against the supported party [your ex] by the supporting party [you], and consideration of any history of violence against the supporting party [you] by the supported party [your ex].
......(j) The immediate and specific tax consequences to each party.
......(k) The balance of the hardships to each party.
......(l) The goal that the supported party [your ex] shall be self-supporting within a reasonable period of time. Except in the case of a marriage of long duration as described in Section 4336, a "reasonable period of time" for purposes of this section generally shall be one-half the length of the marriage. However, nothing in this section is intended to limit the court's discretion to order support for a greater or lesser length of time, based on any of the other factors listed in this section, Section 4336, and the circumstances of the parties.
......(m) The criminal conviction of an abusive spouse shall be considered in making a reduction or elimination of a spousal support award in accordance with Section 4325.
......(n) Any other factors the court determines are just and equitable.
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In re the Marriage of JEANNE and ROBERT H. ANINGER, No. B038780, Court of Appeal of California, Second Appellate District, Division Seven, 220 Cal. App. 3d 230; May 11, 1990: “The only factor adversely affecting [Wife’s] ability to meet her needs was an increase … in her housing cost resulting from her purchase of a $280,000 condominium. … …it would defeat the intent and reasonable expectations of the parties that [Wife] would achieve self-support … by going into debt far beyond her means. … By undertaking a debt beyond her reasonable means to pay presently or in the foreseeable future, [Wife] failed to make a reasonable effort to become self-supporting.”
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NOT Insuring Your Ex after Divorce
The only possible way to keep your ex on your employer’s group health insurance plan is to file for a legal separation instead of a divorce (see my "Legal Separation or Divorce" post).
Otherwise, regardless of what your ex expects or demands, the good news for you is: YOU CAN’T. Not through your employer’s group plan, anyway. And not even if you wanted to! You can only insure family members through your employer’s group plan, and your ex is no longer a member of your family!
However, if you’ve been covering her up to your divorce date, and your employer has more than 20 employees, you might want to let her know (if you want to) that she’s eligible under COBRA for coverage equal to yours for 36 months after your divorce. She’ll have to pay for it out of her own pocket, of course…but at least she’ll be able to get health insurance if she can’t get it through her own employer.
And don’t go and try to be “Mr. Nice Guy” by keeping her on your health insurance even after your divorce is final, because it could bite you in the butt! A friend of ours did, and ended up having to reimburse his employer for every last penny that they’d spent toward her health insurance from the date his divorce was final! We were lucky: my husband waited a couple of months before dropping his ex, but because their end date was fuzzy (it was left open because it was based on her being seen by a specialist first), his employer let it slide. Same employer as his friend, but different circumstances...so, again, be careful!
Our story…
My husband’s divorce took YEARS, and in all that time the devil was eligible for FREE health insurance through her employer. But she refused it out of spite…she wanted my husband to have to pay for her coverage because it was costing him an additional $5,000 a year! Well, as you can imagine, my husband took great satisfaction in finally being able to drop that bitch from his plan! But to add insult to injury, when he finally DID drop her--2 years after he should’ve been able to--she actuallly had the nerve to be petulant and insulting about it! What a surprise!
Otherwise, regardless of what your ex expects or demands, the good news for you is: YOU CAN’T. Not through your employer’s group plan, anyway. And not even if you wanted to! You can only insure family members through your employer’s group plan, and your ex is no longer a member of your family!
However, if you’ve been covering her up to your divorce date, and your employer has more than 20 employees, you might want to let her know (if you want to) that she’s eligible under COBRA for coverage equal to yours for 36 months after your divorce. She’ll have to pay for it out of her own pocket, of course…but at least she’ll be able to get health insurance if she can’t get it through her own employer.
And don’t go and try to be “Mr. Nice Guy” by keeping her on your health insurance even after your divorce is final, because it could bite you in the butt! A friend of ours did, and ended up having to reimburse his employer for every last penny that they’d spent toward her health insurance from the date his divorce was final! We were lucky: my husband waited a couple of months before dropping his ex, but because their end date was fuzzy (it was left open because it was based on her being seen by a specialist first), his employer let it slide. Same employer as his friend, but different circumstances...so, again, be careful!
Our story…
My husband’s divorce took YEARS, and in all that time the devil was eligible for FREE health insurance through her employer. But she refused it out of spite…she wanted my husband to have to pay for her coverage because it was costing him an additional $5,000 a year! Well, as you can imagine, my husband took great satisfaction in finally being able to drop that bitch from his plan! But to add insult to injury, when he finally DID drop her--2 years after he should’ve been able to--she actuallly had the nerve to be petulant and insulting about it! What a surprise!
Thursday, March 5, 2009
Ah, Bifurcation!
WHAT IS A "BIFURCATION"?
When you bifurcate your marriage, you are no longer married...but you're not done with your divorce yet, either.
Under State law, you can "bifurcate" your marital status from all of your other issues (child custody, child visitation, child support, spousal support, distribution of property, attorney fees, and personal conduct) and return to the legal status of an unmarried (single) person. But because your other issues are unresolved, the court retains the ability to resolve them.
WHY BIFURCATE?
There are at least two reasons to bifurcate your marriage:
- Your divorce has been dragging on and on, and you just don't want to be married to that bitch anymore (which was my husband's case).
- It's well past the 6-month mark, and you want to get married again (to someone else, of course...not to your ex!).
CAUTION: The way the law is written (see the blue, bolded text below), even if you bifurcate your marriage, you could still be stuck paying for your ex's health insurance! So if you DO decide to bifurcate, tell your attorney that you want it stipulated that your ex will be responsible for obtaining and maintaining her own damn health insurance, whether through her employer or through COBRA (see my post "NOT Insuring Your Ex After Divorce").
My husband requested a bifurcation from the devil because even though they'd separated in August 2002, he and the devil were STILL married when they were ordered to a Status Conference in January 2005! Do the math...that's 2 years and 3 months after their separation date! His request was granted, and they were bifurcated in April 2005. Yes, I know...that's CRAZY! (Then again, so is the devil: Borderline Personality Disorder, Dependent Personality Disorder, Histrionic Personality Disorder, etc., etc., etc.)
Anyway, here's an excerpt from my husband's Order After Status Conference that you can use when talking to your attorney about bifurcation and healthcare insurance:
.....“The parties stipulate and agree that the marital status shall be bifurcated and a judgment for dissolution of the marriage submitted to the court. ... In entering into this stipulation, each party acknowledges that medical insurance is available to him or her through their respective places of employment and upon entry of the judgment of dissolution contemplated herein, each party shall be responsible for obtaining and/or maintaining his or her own medical insurance coverage.”So here's the kicker: after 6-2/3 years, my husband and the devil STILL don’t have a signed Judgment of Dissolution!!! And do you know, it doesn’t really matter because they're bifurcated! All of their other issues were settled at trial 8 months after their bifurcation, so - technically - they're done...but the devil won’t sign the final Judgment! Why? Because it's FAIR!
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Family Code Section 2330-2348
2337. (a) In a proceeding for dissolution of marriage, the court, upon noticed motion, may sever and grant an early and separate trial on the issue of the dissolution of the status of the marriage apart from other issues.
.....(b) A preliminary declaration of disclosure with a completed schedule of assets and debts shall be served on the nonmoving party with the noticed motion unless it has been served previously, or unless the parties stipulate in writing to defer service of the preliminary declaration of disclosure until a later time.
.....(c) The court may impose upon a party any of the following conditions on granting a severance of the issue of the dissolution of the status of the marriage, and in case of that party's death, an order of any of the following conditions continues to be binding upon that party's estate:
..........(1) The party shall indemnify and hold the other party harmless from any taxes, reassessments, interest, and penalties payable by the other party if the dissolution of the marriage before the division of the parties' community estate results in a taxable event to either of the parties by reason of the ultimate division of their community estate, which taxes would not have been payable if the parties were still married at the time the division was made.
..........(2) Until judgment has been entered on all remaining issues and has become final, the party shall maintain all existing health and medical insurance coverage for the other party and the minor children as named dependents, so long as the party is legally able to do so. At the time the party is no longer legally eligible to maintain the other party as a named dependent under the existing health and medical policies, the party or the party's estate shall, at the party's sole expense, purchase and maintain health and medical insurance coverage that is comparable to the existing health and medical insurance coverage. If comparable insurance coverage is not obtained, the party or the party's estate is responsible for the health and medical expenses incurred by the other party that would have been covered by the insurance coverage, and shall indemnify and hold the other party harmless from any adverse consequences resulting from the lack of insurance.
..........(3) Until judgment has been entered on all remaining issues and has become final, the party shall indemnify and hold the other party harmless from any adverse consequences resulting to the other party if the bifurcation results in a termination of the other party's right to a probate homestead in the residence in which the other party resides at the time the severance is granted.
..........(4) Until judgment has been entered on all remaining issues and has become final, the party shall indemnify and hold the other party harmless from any adverse consequences resulting to the other party if the bifurcation results in the loss of the rights of the other party to a probate family allowance as the surviving spouse of the party.
..........(5) Until judgment has been entered on all remaining issues and has become final, the party shall indemnify and hold the other party harmless from any adverse consequences resulting to the other party if the bifurcation results in the loss of the other party's rights to pension benefits, elections, or survivors' benefits under the party's pension or retirement plan to the extent that the other party would have been entitled to those benefits or elections as the surviving spouse of the party.
..........(6) Prior to entry of judgment terminating status, both of the following shall occur:
...............(A) The party's retirement or pension plan shall be joined as a party to the proceeding for dissolution.
...............(B) If applicable, an order pursuant to Section 2610 shall be entered with reference to the defined benefit or similar plan pending the ultimate resolution of the distribution of benefits under the employee benefit plan.
..........(7) The party shall indemnify and hold the other party harmless from any adverse consequences if the bifurcation results in the loss of rights to social security benefits or elections to the extent the other party would have been entitled to those benefits or elections as the surviving spouse of the party.
..........(8) Any other condition the court determines is just and equitable.
.....(d) A judgment granting a dissolution of the status of the marriage shall expressly reserve jurisdiction for later determination of all other pending issues.
.....(e) If the party dies after the entry of judgment granting a dissolution of marriage, any obligation imposed by this section shall be enforceable against any asset, including the proceeds thereof, against which these obligations would have been enforceable prior to the person's death.
What’s a QDRO?
A QDRO, or Qualified Domestic Relations Order, is a court order issued to your wife that grants her the right to receive all or part of your vested interest in a private retirement plan.
Your attorneys must determine the present value of your plan, and if you and your wife don't agree on the value, the judge will decide it for you based on expert testimony ($$$). So unless the difference is substantial, you’d be better off negotiating the difference.
If your wife isn’t counting on a deferred settlement for retirement income later on, her attorney will likely offer an immediate offset settlement, which would treat the value of each of your marital assets (including debt) as tradable commodities to use as bargaining chips. You’d each take one asset to offset one being retained by the other party. In this case, you might consider offering your wife a larger share of the marital home by offering her a credit of 100% of the value of the marital portion of your pension (vs. the usual 50% she’d normally get), which would increase her share of the home's equity, while you could retain all of your pension.
For example: Let’s say that you have $150K equity in your home; her half is $75K. And let’s say that the value of the marital portion of your pension is $50K; her half is $25K. But rather than give her $25K of your pension, you offer her a 100% credit of your pension’s value toward her share of the home’s equity, which increases her equity share to $125K ($75K + $50K = $125K). While this reduces your equity share by $25K, you'd make up the $25K by retaining the full value of your pension.
An alternative to an immediate offset settlement is a deferred settlement, which requires a QDRO for private retirement plans. You'll still need a Domestic Relations Order for a public plan (federal, state, local or military), but not a “Qualified” order.
Your wife will most likely receive a monthly income from your pension once you’re eligible to retire, but with a 401(k), ESOP, Profit Sharing Plan, etc., she'll be paid out immediately once the plan receives and approves the order.
However, in our case, the devil accepted an offer from the plan administrator to be paid out IMMEDIATELY from his PENSION.
And here’s the kicker: The plan administrator has assured my husband that paying the devil a one-time, lump-sum $6K payment will have NO effect whatsoever on the amount of his retirement!
So, hell yeah, we were excited about that!
Your attorneys must determine the present value of your plan, and if you and your wife don't agree on the value, the judge will decide it for you based on expert testimony ($$$). So unless the difference is substantial, you’d be better off negotiating the difference.
If your wife isn’t counting on a deferred settlement for retirement income later on, her attorney will likely offer an immediate offset settlement, which would treat the value of each of your marital assets (including debt) as tradable commodities to use as bargaining chips. You’d each take one asset to offset one being retained by the other party. In this case, you might consider offering your wife a larger share of the marital home by offering her a credit of 100% of the value of the marital portion of your pension (vs. the usual 50% she’d normally get), which would increase her share of the home's equity, while you could retain all of your pension.
For example: Let’s say that you have $150K equity in your home; her half is $75K. And let’s say that the value of the marital portion of your pension is $50K; her half is $25K. But rather than give her $25K of your pension, you offer her a 100% credit of your pension’s value toward her share of the home’s equity, which increases her equity share to $125K ($75K + $50K = $125K). While this reduces your equity share by $25K, you'd make up the $25K by retaining the full value of your pension.
An alternative to an immediate offset settlement is a deferred settlement, which requires a QDRO for private retirement plans. You'll still need a Domestic Relations Order for a public plan (federal, state, local or military), but not a “Qualified” order.
Your wife will most likely receive a monthly income from your pension once you’re eligible to retire, but with a 401(k), ESOP, Profit Sharing Plan, etc., she'll be paid out immediately once the plan receives and approves the order.
However, in our case, the devil accepted an offer from the plan administrator to be paid out IMMEDIATELY from his PENSION.
And here’s the kicker: The plan administrator has assured my husband that paying the devil a one-time, lump-sum $6K payment will have NO effect whatsoever on the amount of his retirement!
So, hell yeah, we were excited about that!
Wednesday, March 4, 2009
Uh-oh...I Worked 'Crazy' Overtime Before! Now What?!
In ordering spousal support, the court considers the needs of each party based on the standard of living established during the marriage.
I bet right about now you’re thinking that you really screwed yourself by busting your ass and working all that overtime to give her the luxury of staying at home all day!
Yeah, we know...my husband was in the same boat. He'd provided the devil with a lifestyle beyond their means by working an unreasonable amount of overtime, and sacrificed all of his limited free time to give it the luxury of being a stay-at-home wife and mother (even though they didn't have any kids, and it wasn't even pregnant when it quit her job to sit on its ass all day).
So, do you want the good news? Take a look at this California Court of Appeal decision:
In re the Marriage of RICHARD and BARBARA SIMPSON, No. B048099, COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION SEVEN, February 13, 1992, Decided: “After dissolution, a family may be entitled to be supported at what would have been a reasonable standard of living ... given what [Husband] would have earned had he worked at a reasonably human pace." … They are not entitled to continued guaranteed support at a standard of living which existed only because the supporting spouse ‘worked excessive hours during the marriage.’”
This means that the court can NOT base spousal support on the crazy overtime you worked during your marriage...and you've got the Appeallate Court decision to prove it!
I bet right about now you’re thinking that you really screwed yourself by busting your ass and working all that overtime to give her the luxury of staying at home all day!
Yeah, we know...my husband was in the same boat. He'd provided the devil with a lifestyle beyond their means by working an unreasonable amount of overtime, and sacrificed all of his limited free time to give it the luxury of being a stay-at-home wife and mother (even though they didn't have any kids, and it wasn't even pregnant when it quit her job to sit on its ass all day).
So, do you want the good news? Take a look at this California Court of Appeal decision:
In re the Marriage of RICHARD and BARBARA SIMPSON, No. B048099, COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT, DIVISION SEVEN, February 13, 1992, Decided: “After dissolution, a family may be entitled to be supported at what would have been a reasonable standard of living ... given what [Husband] would have earned had he worked at a reasonably human pace." … They are not entitled to continued guaranteed support at a standard of living which existed only because the supporting spouse ‘worked excessive hours during the marriage.’”
This means that the court can NOT base spousal support on the crazy overtime you worked during your marriage...and you've got the Appeallate Court decision to prove it!
Does My Girlfriend/Wife’s Earnings Count Toward My Support Payments?
I know that most of you will find this shocking (NOT!), but the devil actually tried to increase my husband’s support payments based on MY earnings.
At that time, I was a single mom, working full time to provide the sole support of my THREE children. And, yes, SHE KNEW THIS!!!
And not that it would've changed the outcome, but my (now) husband and I weren't even engaged and, in fact, didn't even live together yet. And, again, it wouldn't have changed anything, but once we did move in together, we maintained separate banking and credit accounts, didn't combine our incomes, and (except for rent and utilities) didn't share expenses.
So how do we know that it tried to pull this? Because, in addition to numerous verbal inquiries made to my husband, it also made at least two written inquiries to its attorney...which it stupidly and eagerly shared with us!
Well, thank goodness for Senate Bill No. 145:
In re the Marriage of LINDA MICHELE and PAUL LOUIS ROMERO, No. E030759, COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT, DIVISION TWO, 99 Cal. App. 4th 1436; July 11, 2002, Decided; July 11, 2002, Filed. “In 1993, however, the Legislature … passed Senate Bill No. 145, which added subdivision (b) to Family Code section 4323. That provision, which became effective in 1994, consisted of the following limitation: "The income of a supporting spouse's subsequent spouse or nonmarital partner shall not be considered when determining or modifying spousal support. … In addition to adding subdivision (b) to Family Code section 4323, Senate Bill No. 145 made similar amendments to the child support provisions."
So, to answer your question: "NO, your girlfriend/wife’s earnings can NOT be used in establishing your child and/or spousal support payment amounts"!
At that time, I was a single mom, working full time to provide the sole support of my THREE children. And, yes, SHE KNEW THIS!!!
And not that it would've changed the outcome, but my (now) husband and I weren't even engaged and, in fact, didn't even live together yet. And, again, it wouldn't have changed anything, but once we did move in together, we maintained separate banking and credit accounts, didn't combine our incomes, and (except for rent and utilities) didn't share expenses.
So how do we know that it tried to pull this? Because, in addition to numerous verbal inquiries made to my husband, it also made at least two written inquiries to its attorney...which it stupidly and eagerly shared with us!
Well, thank goodness for Senate Bill No. 145:
In re the Marriage of LINDA MICHELE and PAUL LOUIS ROMERO, No. E030759, COURT OF APPEAL OF CALIFORNIA, FOURTH APPELLATE DISTRICT, DIVISION TWO, 99 Cal. App. 4th 1436; July 11, 2002, Decided; July 11, 2002, Filed. “In 1993, however, the Legislature … passed Senate Bill No. 145, which added subdivision (b) to Family Code section 4323. That provision, which became effective in 1994, consisted of the following limitation: "The income of a supporting spouse's subsequent spouse or nonmarital partner shall not be considered when determining or modifying spousal support. … In addition to adding subdivision (b) to Family Code section 4323, Senate Bill No. 145 made similar amendments to the child support provisions."
So, to answer your question: "NO, your girlfriend/wife’s earnings can NOT be used in establishing your child and/or spousal support payment amounts"!
Your Ex Was Awarded the House?
Your ex was awarded the house,* and she agreed to refinance the loan and buy you out of your share of the equity.** This has been verbally agreed to by you, her, and your attorneys, and approved by the judge, as well.
But wait! Has it been STIPULATED in your Order After Hearing?
If not, you’d better get it specifically stipulated in your Judgment…NOW!
What’s the big deal?
If you don’t make sure that your name is removed from HER mortgage, then it’s YOUR mortgage, too!
You’re no longer making the payments, so you don't have the ability to build equity or deduct the interest on your income tax returns, but you will STILL be financially liable for the loan, and will STILL have all of the same financial worries as before (has she been late on a payment…missed a payment…defaulted…paid her property taxes?), only now you won't have the benefit of homeownership because you no longer have a financial stake in the house!
And what happens if you want to buy another house?
- Best-case scenario: you’ll have to hassle with producing a court order to prove that you no longer have any financial liability for the existing loan even though your name is still on it (which may be an exercise in futility because the lender will likely recognize you as a co-borrower regardless. After all, you applied for the existing loan, you signed for the existing loan, and your name is STILL on the existing loan…so as far as the lien holder is concerned: it’s your loan).
- Worst-case scenario: Your loan application is rejected because your income-to-debt ratio is too high (your mortgage isn’t supposed to exceed 31% of your gross income), even though you don't have a financial stake in the house!
So if you don’t take care of this NOW before everything is finalized, you’ll have no chocie but to take care of it later…which will translate in to more $$$...LOTS and LOTS of $$$. Your attorney will most likely ask the judge for the court to hold jurisdiction over the house until your ex refinances it; he will also ask that it be specified exactly how long your ex has to refinance the loan, and what will happen if she doesn’t do it within the specified period of time (e.g., a forced sell if she can’t – or won’t – refinance, regardless of the reason).
The devil had 45 days to refinance the loan, which she (of course) didn’t meet. But because there was no stipulation concerning what would happen if she failed to meet the deadline, there wasn’t much my husband could do other than take her back to court and spend $$$ that he didn't have.
So be sure your court order is worded properly right from the get-go. It should stipulate (1) that she “shall be permitted an opportunity to buy out Respondent’s [or Petitioner’s, as the case may be] interest in the family residence,” (2) that she must refinance the existing loan, (3) that she must “remove Respondent’s name from any loan or mortgage within 45 days from this date,” and (4) specifically what will happen if she fails to refinance the loan for any reason within the stipulated period of time.
My husband’s Order After Hearing failed to stipulate that the devil had to refinance the loan; it only stipulated that she had 45 days in which to "remove his name from the loan." That’s not the same thing. We're just lucky that this didn't become an issue.
And, NO, a Quit Claim Deed won’t suffice! (http://en.wikipedia.org/wiki/Quitclaim_deed)
*Do NOT let her get away taking you back to court to increase your support obligation just because she can’t afford her mortgage payment: it’s not your fault if she "fails to make a reasonable effort to become self-supporting by undertaking a debt beyond her reasonable means to pay presently or in the foreseeable future." (1)
The devil acknowledged in court that she wouldn't qualify to refinance their marital house on her own because she was unemployed, and that she wouldn't be able to afford the mortgage payments once she became employed, so my husband was awarded the house and agreed to refinance it and pay the devil half of its equity. Two months later, they returned to court and the devil tried to pursuade the judge that she should be given an opportunity to buy the house; it swore that it and her mom would jointly refinance the house, and that its mom would move in and share expenses. This is the ONLY reason my husband agreed to allow the devil and its mom to buy him out of the house. So what happened? The devil refinanced the house on its own, and to this day relies on the entire amount of my husband's child support to make its mortgage payments. Needless to say, we're armed and ready for battle if the devil ever tries to take my husband back to court for increased child support based on its inability to pay its mortgage.
(1) In re the Marriage of JEANNE and ROBERT H. ANINGER, No. B038780, Court of Appeal of California, Second Appellate District, Division Seven, 220 Cal. App. 3d 230; May 11, 1990: “The only factor adversely affecting [Wife’s] ability to meet her needs was an increase … in her housing cost resulting from her purchase of a $280,000 condominium … it would defeat the intent and reasonable expectations of the parties that [Wife] would achieve self-support … by going into debt far beyond her means … By undertaking a debt beyond her reasonable means to pay presently or in the foreseeable future, [Wife] failed to make a reasonable effort to become self-supporting.”
**Do NOT let her stick you with paying any part of her closing costs! The BUYER traditionally pays the closing costs, and you are NOT the buyer…SHE is! The devil tried to force my husband to pay for half of its $6,966 closing costs (or $3,483)! We were dating by then, so he asked me to look over its proposed equity disbursement. If I hadn't looked at this, he would've (unwittingly) paid for its costs because sharing in the devil's closing costs had never been agreed to or even discussed! He protested through his attorney, and the fight was on! I don't know how the devil did it, but it managed to convince the Escrow Officer to set aside the ENTIRE amount of its closing costs (all $6,966!) from my husband’s equity disbursement, which its attorney then held in trust for TWO YEARS (!!!) before they went to trial and the judge deemed that it was rightfully his. He eventually received the money that remained (less what the devil’s attorney had helped herself to, to pay for things like, oh, the ENTIRE cost of their QDRO [vs. half], among other things)!
But wait! Has it been STIPULATED in your Order After Hearing?
If not, you’d better get it specifically stipulated in your Judgment…NOW!
What’s the big deal?
If you don’t make sure that your name is removed from HER mortgage, then it’s YOUR mortgage, too!
You’re no longer making the payments, so you don't have the ability to build equity or deduct the interest on your income tax returns, but you will STILL be financially liable for the loan, and will STILL have all of the same financial worries as before (has she been late on a payment…missed a payment…defaulted…paid her property taxes?), only now you won't have the benefit of homeownership because you no longer have a financial stake in the house!
And what happens if you want to buy another house?
- Best-case scenario: you’ll have to hassle with producing a court order to prove that you no longer have any financial liability for the existing loan even though your name is still on it (which may be an exercise in futility because the lender will likely recognize you as a co-borrower regardless. After all, you applied for the existing loan, you signed for the existing loan, and your name is STILL on the existing loan…so as far as the lien holder is concerned: it’s your loan).
- Worst-case scenario: Your loan application is rejected because your income-to-debt ratio is too high (your mortgage isn’t supposed to exceed 31% of your gross income), even though you don't have a financial stake in the house!
So if you don’t take care of this NOW before everything is finalized, you’ll have no chocie but to take care of it later…which will translate in to more $$$...LOTS and LOTS of $$$. Your attorney will most likely ask the judge for the court to hold jurisdiction over the house until your ex refinances it; he will also ask that it be specified exactly how long your ex has to refinance the loan, and what will happen if she doesn’t do it within the specified period of time (e.g., a forced sell if she can’t – or won’t – refinance, regardless of the reason).
The devil had 45 days to refinance the loan, which she (of course) didn’t meet. But because there was no stipulation concerning what would happen if she failed to meet the deadline, there wasn’t much my husband could do other than take her back to court and spend $$$ that he didn't have.
So be sure your court order is worded properly right from the get-go. It should stipulate (1) that she “shall be permitted an opportunity to buy out Respondent’s [or Petitioner’s, as the case may be] interest in the family residence,” (2) that she must refinance the existing loan, (3) that she must “remove Respondent’s name from any loan or mortgage within 45 days from this date,” and (4) specifically what will happen if she fails to refinance the loan for any reason within the stipulated period of time.
My husband’s Order After Hearing failed to stipulate that the devil had to refinance the loan; it only stipulated that she had 45 days in which to "remove his name from the loan." That’s not the same thing. We're just lucky that this didn't become an issue.
And, NO, a Quit Claim Deed won’t suffice! (http://en.wikipedia.org/wiki/Quitclaim_deed)
*Do NOT let her get away taking you back to court to increase your support obligation just because she can’t afford her mortgage payment: it’s not your fault if she "fails to make a reasonable effort to become self-supporting by undertaking a debt beyond her reasonable means to pay presently or in the foreseeable future." (1)
The devil acknowledged in court that she wouldn't qualify to refinance their marital house on her own because she was unemployed, and that she wouldn't be able to afford the mortgage payments once she became employed, so my husband was awarded the house and agreed to refinance it and pay the devil half of its equity. Two months later, they returned to court and the devil tried to pursuade the judge that she should be given an opportunity to buy the house; it swore that it and her mom would jointly refinance the house, and that its mom would move in and share expenses. This is the ONLY reason my husband agreed to allow the devil and its mom to buy him out of the house. So what happened? The devil refinanced the house on its own, and to this day relies on the entire amount of my husband's child support to make its mortgage payments. Needless to say, we're armed and ready for battle if the devil ever tries to take my husband back to court for increased child support based on its inability to pay its mortgage.
(1) In re the Marriage of JEANNE and ROBERT H. ANINGER, No. B038780, Court of Appeal of California, Second Appellate District, Division Seven, 220 Cal. App. 3d 230; May 11, 1990: “The only factor adversely affecting [Wife’s] ability to meet her needs was an increase … in her housing cost resulting from her purchase of a $280,000 condominium … it would defeat the intent and reasonable expectations of the parties that [Wife] would achieve self-support … by going into debt far beyond her means … By undertaking a debt beyond her reasonable means to pay presently or in the foreseeable future, [Wife] failed to make a reasonable effort to become self-supporting.”
**Do NOT let her stick you with paying any part of her closing costs! The BUYER traditionally pays the closing costs, and you are NOT the buyer…SHE is! The devil tried to force my husband to pay for half of its $6,966 closing costs (or $3,483)! We were dating by then, so he asked me to look over its proposed equity disbursement. If I hadn't looked at this, he would've (unwittingly) paid for its costs because sharing in the devil's closing costs had never been agreed to or even discussed! He protested through his attorney, and the fight was on! I don't know how the devil did it, but it managed to convince the Escrow Officer to set aside the ENTIRE amount of its closing costs (all $6,966!) from my husband’s equity disbursement, which its attorney then held in trust for TWO YEARS (!!!) before they went to trial and the judge deemed that it was rightfully his. He eventually received the money that remained (less what the devil’s attorney had helped herself to, to pay for things like, oh, the ENTIRE cost of their QDRO [vs. half], among other things)!
Monday, March 2, 2009
Buying a House?
I bet you're wondering, "What does me buying a house have to do with anything?" Well, we wondered the same thing once upon a time. So before we bought our house during my (now) husband's long, drawn out divorce, he asked his attorney how it might affect things, if at all.
She, of course, didn't respond.
After we bought our house, his ex started crying about him including his mortgage interest on his income and expense report. We wondered what this was all about, so we again asked his attorney. That's when we were told that buying a house DOES affect your support payments! How? By increasing them, of course!!!
Yes, that's right. Your mortgage interest is used in the Dissomaster calculation to calculate your support payments because, even though you're spending more money each month now that you have a mortgage payment, you're able to claim your mortgage interest on your tax return, which means that you could get a larger refund from the IRS each year. (No guarantee, of course...we ended up OWING money that first year, and yet his support payments increased regardless!)
So while you're decreasing your available cash each month, you MAY be getting an increased refund from the IRS each year (income). Of course, your refund certainly won't be equal to your increased monthly expenses, but the court doesn't care about that...your refund is additional income as far as they're concerned. So buying a house means you'll now have even less available cash because your newfound wealth (that annual tax refund) is going to make your spousal and/or child support payments go up!
I know...it's bullshit, to be sure! But it is what it is...and it sucks!
She, of course, didn't respond.
After we bought our house, his ex started crying about him including his mortgage interest on his income and expense report. We wondered what this was all about, so we again asked his attorney. That's when we were told that buying a house DOES affect your support payments! How? By increasing them, of course!!!
Yes, that's right. Your mortgage interest is used in the Dissomaster calculation to calculate your support payments because, even though you're spending more money each month now that you have a mortgage payment, you're able to claim your mortgage interest on your tax return, which means that you could get a larger refund from the IRS each year. (No guarantee, of course...we ended up OWING money that first year, and yet his support payments increased regardless!)
So while you're decreasing your available cash each month, you MAY be getting an increased refund from the IRS each year (income). Of course, your refund certainly won't be equal to your increased monthly expenses, but the court doesn't care about that...your refund is additional income as far as they're concerned. So buying a house means you'll now have even less available cash because your newfound wealth (that annual tax refund) is going to make your spousal and/or child support payments go up!
I know...it's bullshit, to be sure! But it is what it is...and it sucks!
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