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Recent Posts in Expert Witnesses Category
| December 15, 2010 |
| REPUTABLE APPRAISERS in the PALM SPRINGS VICINITY: Appraising RESIDENCE in DIVORCE |
| Posted By Thurman Arnold |
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I have residential property in La Quinta My wife and I are divorcing and in the process of splitting assets. She and her parents employed * * * of * * * in Palm Desert to value the property. I'd like a second opinion regarding its value.
I need some help in getting an honest appraisal. What would your fee be to provide some help in finding an appraiser?
Thanks.
Frederic
A. Frederic - no fee for answering the question.
I feel comfortable relying on either Joseph Mroczka or Richard Hill, both local appraisers in the Coachella Valley whom I have worked with and found to be honest and hard-working real estate experts.
Thurman |
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| December 03, 2010 |
| ELKINS and New FAMILY CODE SECTION 217: How It AFFECTS YOU! |
| Posted By Thurman Arnold, CFLS |
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The most important new rule in decades affecting the experience of California Family Law litigants is set to be unleashed on January 1, 2011.
It promises a radical change in the way that all family court proceedings - whether they be dissolutions, legal separations, annulments, support applications, custody, and modifications of all of the above - are processed and decided by Superior Court judges and commissioners.
This is a result of the Elkins Task Force, which has been quietly operating in the background of the California family law world since roughly August 6, 2007, when the game changing case of Jeffrey Elkins v. Superior Court (2007) 41 Cal.4th 1337 was decided by our California Supreme Court.
Elkins was a landmark decision which held that the Contra Costa County Superior Court could not through its local rules limit parties in marital dissolution actions to introducing evidence in written declaration form that had to be submitted in advance of trial, or prohibiting except in "unusual circumstances" one party from cross-examining the other about the contents of those declarations. Such a rule, intended for the sake of calendar management and judicial economy, not only had the practical if unintended consequence of favoring parties with attorneys who understood how to work with these rules but fundamentally it violated due process by cutting off litigants' abilities to present all relevant, competent evidence on material issues. Judges, as the triers of fact, are not able to assess witness demeanor and credibility without live testimony.
What is earth shattering about this decision in these economic times is that the Contra Costa Superior Court had urged that its policies and local rules were essential for the "expeditious resolution of family law cases." Soon to be former Chief Justice Ronald George rejected this justification:
"We are aware that superior courts face a heavy volume of marital dissolution matters, and the case load is made all the more difficult because a substantial majority of cases are litigated by parties who are not represented by counsel. [Reference omitted]....
In light of the volume of cases faced by trial courts, we understand their efforts to streamline family law procedures. But family law litigants should not be subjected to second-class status or deprived of access to justice. Litigants with other civil claims are entitled to resolve their disputes in the usual adversary trail proceeding governed by the rules of evidence established by statute. It is at least as important that courts employ fair proceedings when the stakes involve a judgment providing for custody in the best interest of a child and governing a parent's future involvement in his or her child's life, dividing all of a family's assets, or determining levels of spousal and child support....
Trial courts certainly require resources adequate to enable them to perform their function. If sufficient resources are lacking in the superior court or have not been allocated to the family courts, courts should not obscure the source of their difficulties by adopting programs that exalt efficiency over fairness, but instead should devote their efforts to allocating or securing the necessary resources."
Justice George ended by directing the California Judicial Council to create a task force (the 'Elkins Task Force) "to study and propose measures to assist trial courts in achieving efficiency and fairness in marital proceedings and to ensure access to justice for litigants, many of whom are self-represented. Such a task force might wish to consider proposals for adoption of new rules of court establishing state wide rules of practice and procedure for fair and expeditious proceedings in family law, from the initiation of an action to postjudgment motions. Special care might be taken to accommodate self-represented litigants. Proposed rules could be written in a manner easy for lay-persons to follow, be economical to comply with, and ensure that a litigant be afforded a satisfactory opportunity to present his or her case to the court." Hence, the Elkins decision is essentially a Jeffersonian ruling that its intended to empower family law litigants and to require counties and courts to adapt.
The Elkins Task force completed its work and has issued lengthy recommendations. The first changes take place on January 1, 2011. Possibly the most important change is embodied in Family Code section 217. It states:
"(a) At a hearing on any order to show cause or notice of motion brought pursuant to this code, absent a stipulation of the parties or a finding of good cause pursuant to subdivision (b), the court shall receive any live, competent testimony that is relevant and within the scope of the hearing and the court may ask questions of the parties.
(b) In appropriate cases, a court may make a finding of good cause to refuse to receive live testimony and shall state its reasons for the finding on the record or in writing. The Judicial Council shall, by January 1, 2012, adopt a statewide rule of court regarding the factors a court shall consider in making a finding of good cause.
(c) A party seeking to present live testimony from witnesses other than the parties shall, prior to the hearing, file and serve a witness list with a brief description of the anticipated testimony.
If the witness list is not served prior to the hearing, the court may, on request, grant a brief continuance and may make appropriate temporary orders pending the continued hearing."
Family Code section 217 will cause a sea-change in day to day family court proceedings across our state, unless family court judicial officers ignore it to the limited extent possible by court rules. It will likely have immense financial and resource consequences upon not only the courts but upon parties to family court proceedings. It will force the state government in coming years to study whole new paradigms for resolving divorce and domestic partnership dissolution outside the adversary template, including those currently practiced in New Zealand and southern Australia.
It will also pressure parties to consider mediation, and collaborative processes which occur outside congested courthouses, much more carefully. The costs of adversary litigation are about to sky-rocket, making mediation even more appealing from a financial perspective (I have written extensively about the emotional and psychological benefits here an elsewhere). There simply is no governmental money available to absorb the coming Elkins Onslaught. For more information about an alternative method for resolving family disputes, please visit us at www.DesertFamilyMediationServices.com.
At the same time, at least in the short run taken together with some of the other revisions that become effective next month, it may encourage more people to litigate more stubbornly and so make mediation seem less attractive than it did before the changes (just the reverse will be true). Some folks will mistakenly assume that this invites the use of court hearings as a live-testimony forum for sharing unresolved complaints relating to their marriage or domestic partnership dissolution with the other party in open court. Instead, judges will sustain objections to such irrelevant material and parties who seek to use Family Court as a platform to air relationship grievances will find themselves alienating the trier of fact in ways that will have adverse consequences to them beyond just the time and expense of the exercise.
The purpose of today's Blog is to introduce you to section 217 and the new changes. I will follow up with more articles in coming weeks. Without a doubt the new rules will make all the information I provide on my websites more relevant and timely for my readers.
December is new legislation month at the Southern California Family Law Blog presented by Family Law Attorney Thurman W. Arnold. My goal is to inform you well, and early on, on any number of topics that will improve your outcome in family law matters and hopefully help you to reach results that are fair for you, your spouse or ex-partner, your children, and your blended and extended families.
T. W. ARNOLD, III, CFLS
(State Bar of California, Board of Legal Specialization) |
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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?
"Ed from Temecula"
[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. Ed - 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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| June 03, 2010 |
| "PARENTAL ALIENATION" at the 2010 AFCC Conference |
| Posted By Thurman Arnold |
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The topic of the 47th Annual Association of Family and Conciliation Court Conference is "parental alienation." Over 1,000 lawyers, judges, mediators, and mental health professionals (psychologists, therapists, counselors, and court personnel) have converged in Denver for plenaries and dozens of educational and training sessions to share wisdom and views not just about alienating parents, but also concerning many other topics including mediating high conflict partner breakups, understanding how the brain works in conflict and why people behave irrationally and reactively, the effects of parental conflict upon children, children's best interests and parenting plans, domestic violence, and much more.
This is reportedly the largest AFCC Conference turn out ever.
The AFCC a is multi-disciplinary and highly collaborative organization, made up of members of overlapping professions who are passionately cross-pollinating the international social landscape - but particularly within the U.S. - in fertile ways. AFCC is dedicated to facilitating the healthy resolution of family conflict. AFCC's most important function is to serve as a forum for mental health professionals and family scientists and legal scholars to educate and train all of us who are in the day to day trenches of the legal and social struggles surrounding, and consequences of, relationship breakup. It is a natural marriage of a number of related professions, and probably the most important organization affecting family law trends today both in and outside the courtroom.
The concept of "parental alienation" is a highly controversial subject. There is much debate and disagreement nationally and in Denver this week whether parental alienation is really a "syndrome" or "disorder" and whether it deserves its own category in the upcoming DSM-V.
The DSM is short for the Diagnostic Statistical Manual of Mental Disorders. It is published is by the American Psychiatric Association. The current DSM-IV was first released in 1994 and has since been updated. It appears that the DSM-V may be released as early as 2012. It is the APA and not AFCC that determines what is and what is not included.
Mental Health Professionals (MHP's) use this manual when working with patients as a common ground for better understanding their illness and potential treatment, to communicate between themselves, and to help insurance companies and other payors decide whether to cover treatments. It is considered the ‘bible’ for any professional who makes psychiatric diagnoses in the United States and many other countries, and hence what gets in and what does not has long ranging consequences about how MHP's and judges and lawyers view certain behaviors and functioning. In effect it constitutes a consensus over what is and what is not a 'mental illness.'
The parental alienation question in this context is essentially whether there are predictable and discrete behaviors that in combination and given certain levels of intensity can form an identifiable mental illness that can be credibly diagnosed, distinguished from other disorders, and treated?
Hence, the DSM has important consequences to families who find themselves within the Family Court systems, even though that is not what the manual is necessarily intended to be used for.
For instance, in forensic parenting evaluations the DSM-IV may be used to label parents in ways that can seriously impact and impede their parenting rights. Therapists, psychologists, social workers and others who must employ and rely upon its system of coding often provide diagnoses and recommendations to judges and other MHP's derived from the DSM that are used to establish parenting rights and parenting plans in custody disputes and move-away situations.
I will attempt to Blog some information about current parental alienation research soon. In the meantime, consistent with my goal of providing free educational materials to individuals and families who are investigating legal questions involving families, my hope here is to introduce people to these important concepts. Given the nature of Blogs it is easiest to do this in 'layers.'
Thurman Arnold
http://www.ThurmanArnold.com
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| May 24, 2010 |
| What METHODS are used for VALUING BUSINESSES in divorce? |
| Posted By Thurman Arnold |
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Q. I own a business that I began shortly after marriage. Now I am getting divorced. Is this community property even though my partner never worked the business, and if it is what methods might be used to value it?
A. With certain exceptions where, for instance, there has been a transmutation of a community property interest in a business to your separate property per Family Code section 852 (which requires a writing signed by the party adversely affect showing an intent change the character of property from community to separate), all property acquired during marriage through the time, skill and efforts of either spouse is community property. Family Code section 760.
A business begun by one spouse after the date of marriage and before physical separation will need to be divided in a dissolution or legal separation proceeding, and if you and your spouse cannot agree on its value it may need to be evaluated by an expert. This is usually accomplished under the provisions of Evidence Code section 730.
There are a number of methods that can be used to value a business, and depending upon whether the business sells services or products different valuation methods may be more appropriate than others. As a general overview, these include:
- Evaluating sales proceeds
When a business is actually being sold in an arm's length transaction to a third party, the price that a willing buyer will pay and a willing seller accept determines value. This is rare in the case of business valuations, but more common with respect to real property.
The specific asset is valued based upon the actual sales of similar assets or properties with actual sales that can be tracked. With professional practices, this is common with dental businesses which are commonly bought and sold, and so numbers from the sales of other dental practices may be persuasive to a court. Whether this method is useful depends very much on the nature of the business - sometimes there is nothing comparable or little published information about comparable sales. Comparables are also considering in setting the value of real estate.
Sometimes businesses will be cut up into parts that are sold separately. Sometimes the business is valued in terms of what these parts would sell for. It is rarely used except when the parties intend to actually liquidate the company. Liquidation value does not generally include valuing goodwill (because the assumption is there will be no on-going concern). Goodwill is the nightmare component to valuing businesses. Many people in divorce who manage the business believe strongly this is how businesses should be valued (in part because in the absence of an actual sale, it is a fiction to say what a buyer might pay when no such buyers as a practical matter exist).
This relies upon the company records to determine what 'retained value' is. It is rarely used, because it is more a statement of how the company perceives itself, or structured (or even 'cooked') its books, than any objective indication of value.
This is performed through a forensic audit. Usually it is performed on a cash basis, and accounts receivable and much more must be analyzed.
This describes a method that includes valuing the business as greater than the sum of its parts. There are a number of factors that are used.
This is the most common method for valuing businesses used in California because courts find it to be most reliable. If you hope to use a different method, you will need to justify why that method is fairer to the out-spouse. This method requires expensive forensics.
It is not uncommon to bifurcate the question of business valuations to try them separately because often this is the thorniest issue to be decided in a dissolution or legal separation proceeding.
The law of business valuations is extremely complex and even contradictory. The purpose of this blog is merely to introduce the concepts. I will develop these themes in more detail in additional family law blogs.
Thurman W. Arnold III
http://www.ThurmanArnold.com
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| May 19, 2010 |
| When are ASSETS VALUED for purposes of DIVISION in a California DISSOLUTION? |
| Posted By Thurman Arnold |
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Q. My wife and I separated two years ago and we have decided to file for divorce. We don't agree on what date we should be setting the value of some of our property, like the residence where she has been living with the kids all this time. She wants it valued today, since prices are down, but when I left we agreed that she would take it at its value then. That value was substantially higher than today, and I don't think it is fair that I have suffer the decrease in real estate prices. What might a Court do?
A. First, it is always my hope that you and your spouse can agree on as many issues as possible, without court intervention. One never knows for sure what a Court will do, and my experience is that people are far better off working through their disagreements by way of Mediation. One reason why is to ensure you are in charge of your life, not a stranger. It is possible to mediate parts of your divorce.
Still, valuing real property is not a difficult legal issue. Family Code section 2552(a) directs the court to "value assets and liabilities as near as practicable to the time of trial." Time of trial is also the equivalent of the time of settlement - in order words, if you cannot settle your divorce and you take it to a judge, that will be the time of trial so the same rule for the date of valuation should apply to your settlement negotiations.
Family Code section 2552(b), however, gives the court discretion to pick another date before trial for the valuation of property "for good cause" in order to "accomplish an equal division of the community estate ... in an equitable manner." This concept is called an "alternate valuation date." It is often applied in cases of business valuations, which is a complex topic I will separately address, but the basic reasons for the potential different treatment includes the fact that business values can be intentionally depressed by the spouse who controls the assets (and so it may not be fair to apply a lower value) or because the "in-spouse" has contributed substantial value to the company since separation and it is not necessarily fair that the other spouse share those benefits.
Here you might argue that you and your spouse reached a verbal agreement to divide all your assets two years ago if that is in fact what you did, in order to hold to those values. But verbal agreements are difficult to prove if they are not admitted by the other party, absent witnesses and she will continue have various defenses where she was not independently advised before reaching agreement.
Most courts are going to value passive assets like houses or investments or pensions at the time of trial. That does not mean that post-separation increases in value, like increased equity by paying down principal on a mortgage, or contributions to a pension after the date of separation, will not be reimbursed to one or the other of you to compensate the separate property (post-separation) contributions.
If you do seek an alternate valuation date, you need to file a Notice of Motion to Bifurcate the issue (FL-315), along with the accompanying declaration establishing why this is more fair and appropriate than the basic rule. These forms appear in our Family Law Form Library.
A bifurcation is essentially a request of the court to carve off one or more issues in the divorce for separate trial or adjudication. It is often used where a call needs to be made on one issue that, once decided, will assist in resolving other aspects of the case.
Thurman W. Arnold III
http://www.thurmanarnold.com |
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| May 10, 2010 |
| What does it mean that a judge has ordered a 730 EVALUATION in my custody case? |
| Posted By Thurman Arnold |
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Q. My ex wife and I are fighting over custody of our three children. The judge decided to appoint a psychologist to interview us all. How does this affect me and my case?
A. In high conflict cases where two sides have entrenched and opposing views about what is in the best interests of their children in terms of custody and visitation, California Evidence Code section 730 provides judges the option of appointing an expert witness to investigate the matter and report to the Court. This is often referred to as a forensic evaluation but in California we typically call them "730 evaluations."
What this means for you is that your family is likely in trouble, since these custody "evals" only are necessary where parents are failing to proactively resolve their parenting issues. They can be quite expensive in every way. I describe the process here in part to help encourage you avoid it. Still, there are times when it can lead to a lessening of conflict and it may be inevitable in move away situations.
Forensic evaluations can be used in a number of other settings as well, including valuing businesses or real estate. It is extremely common in move away cases and in fact a strong argument can be made that to allow a parent to relocate with minor children in the absence of such a report (if it is requested) violates the due process rights of the non-moving parent [In re Marriage of McGinnis (1992) 7 Cal.App.4th 473, 9 Cal.Rptr. 2d 182].
In your situation the Court has likely appointed a Psychologist or Marriage and Family Therapist whose work is already known to the Court because that person is on a panel the Court uses, or possibly because one or both lawyers have worked with the expert and either recommended him or her to the Court. Often the parties' lawyers will agree upon this third person.
Reliable evaluators are not hired guns for either side. However, like everyone else they can have their own biases. To the extent that you can, it is always a good idea to get as much information as possible about a potential evaluator before a selection is made. Courts generally don't impose someone on the parties where one of them objects to that person, but in smaller communities there may be fewer options in terms of qualified evaluators.
It can be very difficult for a judge to determine the truth of claims between family law litigants, what their underlying motives are, whether there is some mental health or substance abuse undercurrent, and whether one parent is more likely than the other to foster an ongoing relationship between the other parent and their children. Courts don't have the time or resources to do much more than call balls and strikes based upon witness declarations or live testimony. Therapists and psychologists are able to spend time interviewing parents and sometimes have them complete psychological testing, they meet children, talk to teachers, visiting homes, check with therapists who are seeing family members, and also interview significant others, new spouses, and other children in blended families. A much more reliable picture may emerge than that which comes from the parties' own descriptions of themselves, their children, and the other parent.
These custody evaluations can be quite expensive, typically starting at about $2,500. They seem to average between $4,000 and $6,000, but the costs skyrocket with the number of people other than the parents themselves (often called 'collaterals') whose input is required.
It typically takes at least three months for an expert psychologist or MFT to complete all the necessary interviews and write a detailed report. In my experience the time frame is closer to four months. This report is then submitted to the attorneys and to the Court.
Most courts require this report to be submitted at least 10 days prior to a hearing, so that both sides have ample time to review it. If you are involved in a custody dispute and you or your attorney receive the report late, if you disagree with its recommendations you may want to object that you have not had sufficient time if you want a continuance; otherwise, the Court may adopt the recommendations at that hearing.
In almost all cases where a 730 report has been completed, either side may request that an evidentiary hearing take place with live testimony and the ability to examine and cross-examine witnesses - including the custody evaluator whose recommendations are being considered. Depending upon the urgency of the family's issues and the Court's availability, these hearings may not be set for weeks or months.
In addition, if you feel that the evaluator failed to adequately investigate the case, or did not meet the standards of practice for such evaluations, you may want to consider hiring your own Evidence Code § 733 expert to advise you or your attorney on how to point out the shortcomings to the Court. This can be an expensive, but sometimes useful, way to challenge findings that you do not agree with. The usefulness of 733 evaluators is limited by the fact they do not get to perform a second evaluation (for instance, they rarely meet with the other party), and without conducting full interviews with all relevant persons they may be ethically bound not to render an opinion and certainly their views won't carry the same weight with a judge as the full evaluator. This is not to imply, however, that your children's interests are even your own interests are served by attacking an evaluator's report just because you don't like portions of it.
I will write more on this topic but want to leave you with this thought: Contested custody cases will damage your children, guaranteed. I urge you to consider mediating your custody differences instead, either by using a qualified mediator or a mental health professional.
Attorney T.W. Arnold III
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| January 07, 2010 |
| My wife she used her INHERITANCE to buy our home. We are getting divorced. |
| Posted By Thurman Arnold, III |
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Q. My wife and I separated in June 2009. When we purchased our home in March of 1998 (married December 1994), she used part of an inheritance from her grandmother to help with the down payment. I have been paying the mortgage since we bought it. Will she get her inheritance back in our divorce? What would I get?
A. Because I need more information and the answer to some questions and then to follow up questions, I can only give you a generalized response.
So long as your wife can trace the portion of her downpayment contribution to the inheritance, she is entitled to a Family Code section 2640 reimbursement in the amount that she proves by this tracing. She is not entitled to interest on grandma's gift to her, however, but only the principal. However, this assumes that the downpayment contribution always remained separate from any other money or bank assets that you had an interest in, or that the community had an interest in: If the inheritance monies were commingled with joint monies or your separate funds between the date she received them and the date they were used as part of the purchase price for the home, then a further tracing is required to establish that what money in the account at that time was her separate and what amount was something else.
Here is Blog that discusses tracing principles in more detail.
You don't report whether you were on title to the residence when escrow closed or at any later time. Whether or not you were on title when the property was purchased, it is presumed to be community property UNLESS you (a) deeded off when escrow closed or deeded off since that time or (b) consented to or are deemed to have consented to your Wife being the sole record title holder if at the close of escrow title issued in her name.
If you were on title at close of escrow and to the present day, the answer is easy - your Wife gets her traced inheritance money first, off the top, from any equity in the home. She does not get interest on the money. The remaining net equity, without other facts, belongs to the community so that each of you is entitled to one-half of what remains.
If you were not on title when escrow closed, and if you cannot rebut by clear and convincing evidence the legal presumption set forth in Evidence Code section 662 (based upon form of taking title in her name alone) that you consented to that outcome, then (a) your Wife still gets her downpayment back and (b) the community estate is entitled to be reimbursed for carrying the mortgage all those years and reducing the principal balance due the mortgage holder. It doesn't matter who paid the mortgage, so long as it was paid from community earnings during the marriage.
There is a very important reimbursement concept under California Law known as Moore-Marsden apportionment. It applies to a common situation where a home is acquired before marriage (or during marriage as separate property), title is in the name of the acquiring spouse alone, and during the marriage and up to separation or divorce and there is or was a mortgage that was paid during the marriage.
Where this occurs the community estate acquires a legal, reimbursable, interest in what would be otherwise be entirely the separate property of the titled spouse IF community funds (earnings of either spouse, for instance, or both) are used to make the mortgage payments. The idea is that joint funds are being used to benefit a separate property interest, i.e., the separate property equity. Many legal scholars consider this to be a breach of fiduciary duty - that whenever one or the other spouse's separate property interests are increased with community funds, or community time, skill, and efforts of either spouse during the marriage, the community is disadvantaged and that this disadvantage violates the statutory duties of the parties that place the party's joint interests above their separate interests.
The formula for apportionment is that the community acquires a pro tanto (dollar for dollar) interest in the ratio that principal payments on the purchase price made with community property bear to payments made with separate property. Hence, any increase in value (appreciation) must be apportioned accordingly between the separate property and the community property estates upon separation or dissolution.
Note that this only applies to separate property owned prior to marriage with a mortgage that was paid during marriage where an equity position has been increased. For instance, if a mortgage exists but it is an interest only, payments during marriage do not reduce principal. Therefore, the separate interest of the owner spouse is not improved because the debt remains exactly the same. As a general rule, the amounts paid for interest, taxes, and insurance on the house are disregarded since that portion does not to contribute to the capital investment.
Also, it assumes that the mortgage was paid with joint (community) funds, or that the funds used were so commingled that the "separatizer" is unable to trace them to a separate property source (meaning they don't have records showing where each payment was made or are unable to provide a recapitalization of the source of the funds). If your husband reduced the mortgage throughout the marriage but he did it with an account that was his separate property then the community would not have this reimbursement right.
The Moore Marsden formula requires a number of bits of information at important points in time to be properly calculated. These include: a) what was the original purchase price; b) what was the original mortgage and downpayment; c) what was the property worth at the date of marriage (DOM); d) what was owed to the lender at that time; e) what was the property worth at the date of separation; f) what was owed at that time; g) what is the property worth on the date of the calculation (i.e., the trial date); h) and what is the principal pay-off at that time?
This is agood example of why family law and divorce cases can become quite expensive. Obtaining these records, particularly if you are the 'out spouse' can be difficult, and sometimes a forensic accountant is the best option for calculating these apportionments. Find a local CPA with family law experience to help you trace the funds. You need an experienced family law attorney for these types of matters as well.
In your case, with a lengthy marriage and little owing, you have significant Moore Marsden entitlements.
T.W. Arnold |
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