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Recent Blog Posts in October 2010 |
| October 28, 2010 |
| What Do I Do to Protect My Community Interest In PERS and STRS RETIREMENT PLANS? |
| Posted By Thurman Arnold |
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Q. What should I consider to ensure that I have a claim in my husband's teacher's retirement plan once he files for divorce?
A. CalPERS (PERS) is the California Public Employee's Retirement System. California Government Code sections 20000 to 21703 describe it. This includes all kinds of California state employees including police officers, firefighters, emergency services employees, and other public safety employees as well as university teachers, professors, and other professionals.
CalSTRS (STRS) is the State Teachers' Retirement System, which is governed by California Education Code sections 22000-25115.
Both require a joinder pursuant to Family Code section 2060 as a condition to complying with an order against the plan, and they are generally cooperative in facilitating this. Likewise, most other municipal plans require joinder and cooperate with parties who are attempting to accomplish it.
In order to protect your rights, we recommend that you not only serve the Joinder Summons and related pleadings (see our Family Law Forms Library page) but that you also give written notice, by certified mail, on the Plan per Family Code section 755.
The joinder process for those California employee benefits that you can join is easy. The forms you need are the
It is important to name the plan correctly. The plan is a separate entity from the employer. Next, they do need to be properly served per FC section 2062.
Within 30 days the plan must respond by a Notice of Appearance. However, they rarely do. If they fail to, the clerk must enter their default. As a practical matter, the Plan will likely accept the order of the court or any settlement you reach thereafter so long as it meets the plan administrator's requirements.
Thurman W. Arnold III, CFLS
www.ThurmanArnold.com |
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| October 22, 2010 |
| How Can I STOP My Spouse From LIQUIDATING OUR COMMUNITY PENSION? |
| Posted By Thurman Arnold |
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Q. I am afraid my husband may liquidate our 401k and IRA's that are in his name. Is there anything I can to do freeze the accounts or make sure he can't empty them out before I can hire a lawyer or file for dissolution?
A. There is always the risk that one party will loot the community estate in anticipation of a family law proceeding, or that they may even act innocently but still wind up depriving the other spouse of their community interest in a pension asset.
If the spouse in whose name an IRA, 401k, or other pension device is held wants to access these monies and you object, or just want to make it impossible for them to do so without first securing your agreement, there are important steps that will work so long as you undertake them in time.
Two situations with pension plans or retirement assets are common: 1) a retired or disabled spouse is already drawing upon them on a monthly or other basis and 2) or they may want to liquidate the account entirely. The latter situation is especially common, in my experience, with plans valued under $50,000.
Lets assume your husband has a Roth IRA for $50,000. It was opened during marriage when all contributions were made, and half therefore belongs to you. He instructs Fidelity Investments to cash it out. Since this is an early withdrawal (presumably), there is a both a 15% penalty to the IRS (unless the money is rolled into a new IRA within 60 days, or the withdrawal occurs within 60 days from the date of entry of a Divorce Judgment dividing the assets) and the monies he receives will be taxed as ordinary income at rates that depend upon his bracket.
If there is sufficient other property in the community estate to ensure that you will get your half from some other source down the road, this may not be a problem for you. However, down the road has a habit of never arriving and in this economy other assets from which you expected a reimbursement might evaporate.
Perhaps, this is not okay with you from a number of angles. For instance, an exception to the automatic restraining orders contained in the California Dissolution Summons regarding the prohibition from invading accounts allows parties to do so to generate the monies to hire their lawyers. These "ATRO's" will not likely protect you from this type of withdrawal after the fact - however, it may protect you as a preemptory strike. As always I urge you to act fairly and not to abuse power or be manipulative in your divorce.
You have a couple of options for protecting your interests, including joining the pension plan into the family law proceedings.
But the most important and immediate device you can use is a notice to the Plan Administrator pursuant to Family Code section 755(b). Essentially this written demand tells them that you are claiming an adverse interest in the pension assets and its legal effect is to put the Plan on the hook for any payments they make after receiving the notice. They will not release any money once you properly draft and serve it.
Serve it either personally through a process server (which may be difficult and expensive if they are in another town or state), or by registered or certified mail, return receipt requested.
Keep in mind that joinder of certain types of pensions - like federal public entity plans - cannot be achieved through a California joinder pursuant to Family Code section 2060. Thus, this §755 Notice is really important to freeze the status quo pending an ultimate QDRO.
By the way, this will also work to freeze other forms of payments - for instance from insurance companies.
T.W. ARNOLD
"We provide you cutting edge, insider information about the law" |
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| October 22, 2010 |
| Are STOCK OPTIONS COMMUNITY PROPERTY? |
| Posted By Thurman Arnold, CFLS |
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Q. How are stock options treated if I decide to dissolve my domestic partnership?
A. Stock options are commonly used to attract or retain key employees with incentives outside the basic salary structure. Whether you are dissolving a marriage or a RDP (registered domestic partnership), valuing and dividing stock options can be tricky.
The simplest situation is where the stock options were earned before separation. In such cases they are clearly CP. But often there is a question of when these benefits were in fact "earned" because employee services that generate them are sometimes contributed over long periods. These may include a pre-marriage period (when time, skill, and efforts of either party are always SP) and they may extend for some time past the date of physical separation (and so be SP). The question when stock options were earned becomes quite fact specific and depends a lot on what the employer intended and what kind of options they are. In re Marriage of Hug (1984) 154 Cal.App.3d 780, 201 Cal.Rptr. 676.
Stock options that are earned during the marriage, but vest afterwards, generally belong to the community. They are treated as deferred compensation, like certain types of pensions. Usually an employee is granted the right to buy stock, now or in the future, at a fixed price. They may be forced to sell that stock back to the company if they leave. What controls whether the options are characterized as community or separate is when they are granted and when they vest. If they do not vest at all, as where a minimum number of years of service by the employee are required which is not met (even where the employee-spouse quits after separation and so blows them up), they are neither separate or community property - instead, they are not viewed as a property interest at all. In those cases they were a "mere expectancy" that never matured.
In cases where an employee must work for the company for a fixed number of years to be eligible, but the spouses or RDP's separate before those years have been served, the options have both community and SP attributes. To the extent that they result from post-separation efforts too, they must be apportioned between CP and SP. As with how interests in pensions are commonly evaluated, courts tend to follow a "time-rule". The time rule looks like this:
DOG to DOS
__________ X # of Shares Exercisable = C/P shares
DOG to DOV
DOG = Date of Grant
DOS = Date of Separation
DOV = Date of Vesting
Stock options that are granted after the DOS are usually treated as the separate property of the recipient, even where some of the employee's contributions occurred before. This is because of the importance of what the employer intended to the analysis.
This Blog is intended just to give you some sense of the law over these potentially complex questions. As with everything, different facts can lead to different outcomes and stock options are complicated financial devices.
Also, stock option disputes sometimes involve claims of fraud - as where a small closely held company or family business tries to funnel or manipulate how when the options are granted or vest in an effort to favor one spouse over another.
Perhaps the only practical way that a former spouse or partner may learn that stock options exist or when they vest or are exercised is by the self-disclosure of the employee. The law is clear that spouses and domestic partners are required by their fiduciary obligations to make these disclosures. Refusals to disclose can have severe consequences under Family Code section 1101.
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| October 20, 2010 |
| JAKE ARNOLD Turns SIX! |
| Posted By Thurman Arnold |
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The Lost and the Found
[One Attorney's Path to Redemption]
__________
Unconditional love is something we humans yearn for,
but just endlessly.
The difficulties of relationship break up prove this to be true,
but only every time.
Animals, friends and family are not
merely a sanctuary
when we are all working well -
but a ready invitation for redemption
when we are not,
every, every day.
In this way
devotion
to special creatures,
like children,
animals
our inner child,
and you ...
teaches that not only can we carry on
- but how to.
Happy Birthday to Puppy Dog Jake
and to all the beings whom you hold dear....
and now Merry Christmas!
~T.W. Arnold~
Happy Christmas Time Holidays!
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| October 18, 2010 |
| How Long Do DOMESTIC PARTNERS Have to Wait to DISSOLVE Their Partnership? |
| Posted By Thurman Arnold |
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Q. Is it true that domestic partners who want to dissolve their partnership don't have to wait the six months that married couples have to wait when they divorce?
A. Nope.
If you qualify under Family Code section 299 (a sort of "summary proceeding") to terminate your RDP
by filing a Notice of Termination with the California Secretary of State instead of a court proceeding, you still have to wait the same six months that straight couples must wait. If you don't qualify under section 299 you have to go through exactly the same court disso process that married couples enjoy
: @ (
Moreover, if the your partner files a notice of revocation of the termination of domestic partnership during that same six months, then either or both of you will need to file a court proceeding to legally terminate your registered domestic partnership (RDP) status. |
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| October 18, 2010 |
| How Do I Get An Order for ATTORNEY FEES in a COMPLEX CASE? |
| Posted By Thurman Arnold |
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Q. My divorce seems like it has stalled. My wife operates our family business, we own several properties including a commercial building and she collects the rents, she isn't cooperating with me on custody on our kids, and I need money to pay my attorney. She is controlling this case, and I am getting nowhere. Any recommendations?
[Please note - this Blog is updated with a recent Blog Article detailing the 2011 Revisions to the California Family Code affecting attorney fee awards 12/9/10]
A. I frequently hear from people whose cases are "stalled" because they have no money to pay their attorney, and no money to hire forensic experts. It is a problem I face in my practice with certain clients. It takes money to develop your case, and if there is really none available it is difficult to get anyone to pay attention. Often there are assets that only one spouse controls. That spouse or RDP (registered domestic partner) usually claims those assets to be their "separate property" even when the claim is ridiculous (for instance, closely held stock issued as "their sole and separate property" when the vesting of title in their name alone during marriage was just their manipulation and you didn't agree to it).
When there are assets that exist there is much that you can do. These assets, whether they be allegedly separate or community, are available to be borrowed against, or sold, to raise money so you can pay your attorney and hire experts to do the work that must be done.
However, your attorney needs to understand how to accomplish this or find one who does. Specifically one method that works well is to have a referee appointed under Code of Civil Procedure section 639 to oversee a "case management plan" under the circumstances described in
Family Code section 2032(d).
Specifically, have your attorney ask the Court in a motion to make a finding that your case involves "complex or substantial issues of fact or law." These can be related to property rights, custody, visitation, and support and may include bifurcations of issues. If you don't have an attorney, this would still be a start to obtaining findings that will generate money to hire one.
Once the Court so designates your case, it will itself begin to implement a plan or assign someone else - like an outside lawyer whom the court recognizes as an expert, to make recommendations as a referee. While the Court is not obligated to follow the recommendations of these referees, they ususally do. And if they don't the court may find itself overturned on appeal as happened 10/1/10 in In Re Marriage of Tharp, a case I will be writing about in detail as time permits.
This is a major step in not only getting someone to look more closely at the attorney fees you need (judges, after all, have really limited time) but also a good way to jump start a stalled dissolution or other family law case.
BTW, under the new statutes that take effect in 2011 as a result of the Elkins Task Force recommendations, case management may become the norm in California in family law proceedings. TW Arnold
10/18/10 |
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| October 11, 2010 |
| Our Disso is Final But We Never Changed the JOINT TENANCY DEEDS. My Ex Just DIED. |
| Posted By Thurman Arnold |
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Q. I just found out that my ex-partner passed away last week. Our partnership disso became final six months ago. We had agreed to hold some commercial property jointly until the real estate market improved, and then to sell it and divide what we netted. They were held in "joint tenancy" and that was never changed. Does this mean I now inherit his share?
A. Probably not, but read on. I talk about this in my last blog about title to property held as "Community Property" and describe "rights of survivorship". But this raises a point that might be useful for you or someone out there - it is not all that uncommon, especially these days, that people agree to continue to jointly own real estate hoping the market is better down the road when they will finally sell. Sometimes they'd actually prefer that their former domestic partner or spouse inherit their share if they die first, before the property is sold especially when there are no children or when adult children have been disinherited.
However, it is not enough that a Judgment, Stipulated Judgment, or Settlement or Termination Agreement say "we will continue to hold the property jointly after the divorce is final and will agree to sell it later (or maybe after a specific time period)" to preserve a joint tenancy interest and its chief attribute - a right of survivorship. This is because without more once the domestic partner (or marital) status is terminated, all joint tenancies that existed prior to that point become tenancies in common as a matter of law. California Probate Code section 5601. Tenancies in common do not contain any survivorship rights.
There is a big "however", however. Section 5601(b) has two exceptions that might help you: (1) Where the joint tenancy is not subject to severence at the time of death, possibly where a written agreement specifically says so (as in a settlement agreement filed with the Court or (2) there is "clear and convincing" evidence that the person who died intended the preserve the joint tenancy in favor of the former partner or spouse.
Hence, where anybody intends to preserve joint tenancy status they should specifically say so in a written document, preferably as part of the Judgment. I always reference the Probate Code section itself. Or, there may be something else that is sufficient to cause the Probate Court to find no severence was intended. My bet is that if there were no other heirs at law for the deceased party, the court would be more easily convinced to find in your favor then if there are surviving children or other family left.
Notice that under the statute the outcome would be different if the Judgment was a decree of legal separation instead.
T.W. Arnold
http://www.DesertFamilyMediationServices.com
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| October 11, 2010 |
| What does "COMMUNITY PROPERTY WITH RIGHT OF SURVIVORSHIP" Mean? |
| Posted By Thurman Arnold |
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Q. I am considering a divorce. I have found the deed to our home, and I see that the grant deed by which we took title is held like this "to Jim ... and Mary ..., husband and wife, as Community Property, with Right of Survivorship." What does this mean for me?
A. There are several very important consequences that flow from this language. The way is which title is held (or "form of title") is also called "vesting." Everything I say here applies to title for any form of property - bank or brokerage accounts, for instance, as well as any kind of real estate and the types of personal property for which we use title documents.
First, a "right of survivorship" means that if one party dies - but only before a final judgment of termination of the marriage of domestic partnership, or where a termination of marital status or partnership status occurs before the rest of the case is resolved in judgment form, the party that survives them inherits 100% of the dying party's share of the community property. It does not matter that there exist a Will or Estate document that purports to create a different transfer upon death. Where a right of survivorship exists there is no need to probate an estate in order to obtain full title - all that is required is that a Affidavit of Death of Joint Tenant be recorded with the County Recorder for the County where the real property is located. A Death Certificate must be attached to it. The transfer is then complete.
For other forms of property, as with jointly held bank accounts, the same results occur. However instead of recording an Affidavit of Death with the County Recorder's Office, a Certified Copy of the Death Certificate is simply provided to the banking institution. As a practical matter vehicle titles are different in the sense (a) they are filed with any DMV office in California and (b) the title language rarely references "community property" or 'rights of survivorship', and instead titles the property to Jim "and" "or" Mary. I will have to discuss the rules relating to inheritances and surviving widows and widowers in a different blog.
Second, if a party dies after a Final Judgment dissolving a marriage or domestic partnership, or after a "status termination" before final judgment, but title to the property has never been changed for whatever reason then there is no automatic right of survivorship - in legal effect, the survivorship rights were terminated (severed) upon the by operation of law as a consequence of the Status Termination.
Likewise, if a party to a divorce proceeding dies before the termination of status then the survivorship right controls (see below). Since people don't expect this, something lawyers call a "Blair warning" based upon a particular appellate decision is set forth in the
Family Law Summons Form FL-110 that no one ever seems to actually read (hopefully your lawyer told you about it).
This is one reason by marital bifurcations can have unforseen consequences and should be taken seriously when another spouse in the course of a divorce seeks to terminate status before the entire case is resolved by Final Judgment.
Third, in California when property is vested in both parties as "CP with right of survivorship" it is the equivalent of a "joint tenancy." All the same rules apply. Thus, what we are speaking to applies whether the "CP with right of survivorship" language was used for more common "to Jim and Mary as Joint Tenants is used."
Fourth, there does not need to be any reference to whether the parties are "husband and wife" for these rules to apply. Non-married people can be joint tenants as to any form of real (land) or personal property and the death of one vests the remaining title in the other - however, since there will be no termination of marital status since there is no marriage (assuming no domestic partnership either), there is only one way to destroy the right of survivorship: By transferring at least one party's interest as a "joint tenant" to themselves as a "tenant in common". The transfer of tenant in common interests after death follow the rules of testacy (a will exists and directs who gets what) and intestacy (no will exists, and specific legal rules declare who gets one depending upon their familial relationship to the decedent.
Fifth, many lawyers and savvy unrepresented parties will destroy the right of survivorship before the termination of marital status through the method outlined directly above. It only requires one party to accomplish this and it does not require the other party's consent. This has risks, however, since if you destroy a joint tenancy interest prematurely and other spouse dies then you will not inherit their interest but you will of course inherit you own 50%. If you are a child of a parent married to a nonparent or estranged parent and wish to protect your inheritance rights for an ailing father or mother - and they want you to inherit - you should consult a lawyer to assist in destroying the right of survivorship in a legally enforceable way. Note that a termination of this survivorship right violates the automatic temporary restraining orders that arise at the moment that every California dissolution or legal separation proceeding is filed, and that special rules exist for terminating joint tenancies which - if ignored - may not only render the attempt transfer void but further subject you to contempt or other penalties including attorney fees for trying to sever it improperly. Family Code section 2040(b)(c).
Sixth, and most important for the average divorce and in answer to your question, important legal presumptions arise from the Form of Title that have a huge impact on whether property is considered as community or separate. Way simply put, title held as you describe will almost certainly be declared community property for purposes of divorce and each spouse will be entitled to an equal one-half equity interest. However, that outcome does not require the "community property" language to be present in order to apply - any form of title acquired in joint names (tenancies in common, joint tenancies, tenancies by the entirety) triggers the presumption. The relevant Family Code section here is 2581.
Seventh and last for this Blog article, title presumptions are a kind of "super presumption" under the law in the sense that generally in order to rebut (disprove) them, the evidence that you submit must be "clear and convincing." A garden variety presumption in comparison is the rule that property acquired during marriage in whatever form (including title) is presumed to belong to the community. Family Code section 760.
Although FC section 760 doesn't use the word "presumption" that is what it means, and this presumption is the ordinary "by a preponderance of the evidence" presumption - meaning 51% likely or better. Clearing and convincing can be considered as 75% or better - although that is a simplification. Take a look at FC section 2581(a) and (b).
Unfortunately, that is not the end of the analysis because even where property is titled jointly, a party who can trace separate property contributions to its acquisition or certain improvements to it can recover those (Family Code section 2640) if they can follow the money through written records in a legally sufficient way in the event of a divorce. In the event of a death, these reimbursements are extinguished.
I discuss "tracings" on this Blog.
Different but similar rules apply to Living Trusts which are beyond the subject of today's Blog. I can see this is a good topic and "I'll be back." |
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| October 02, 2010 |
| TIPS on How to CONTINUE a SUPPORT HEARING and Buy Time |
| Posted By Thurman Arnold |
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Q. My husband has not updated his I & E for six months. I know he is not reporting his income fairly. How do I buy time so the Judge doesn't decide my support rights based upon outdated information?
A. So here is a secret tip for my blog readers. FL-150 Income and Expense Declarations (the I & E you reference) must be updated every 90 days in order to be current.
After some continuances on any support application, whether child or spousal support, these declarations become 'stale.' Whether you need to stall for time or just want an honest representation from the other party, it is essential that all information be "current".
California Rule of Court, Rule 5.128(a) states as follows: "'Current" is defined as being completed within the past three months providing no facts have changed. Those forms must be sufficiently completed to allow determination of the issue."
Any competent judge will listen to your argument that 'facts have changed' and require the other party to update their information.
If you cite this rule you will impress them with your devotion to the law!
You are entitled to a continuance (which you should use well, since it may be the last one). Now may be the time to hire a lawyer....
Good luck!
Thurman Arnold
http://www.DesertFamilyMediationServices.com
10/2/10
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