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California Family Law Blog

Divorce in the face of serious debt

Marriage is understandably a complex thing given that it touches every aspect of a person's life. This means that your marriage could experience challenges from a variety of sources. For many couples in California, it is money that becomes a big hurdle to their ability to successfully manage their relationship. In fact, many a divorce has been precipitated in large part due to financial problems. 

When your debt load is so excessive that you are considering filing for bankruptcy at the same time that you are considering filing for divorce, you will want to carefully assess the timing of both of these decisions. There may be situations in which it is advantageous for you and your spouse to file a joint bankruptcy and then get divorced. There may also be times when it is better for you to settle your divorce first and then turn your attention to a bankruptcy or other means of addressing your debt.

Your home and mortgage when you divorce

If you are getting divorced and you and your spouse own a home together in California, you will need to decide whether to sell your home or to have one partner keep it. Family homes are commonly sold when people get divorced and there are many good reasons for this. One of the reasons it may be best to sell your home is to protect you from future financial challenges brought on by your former spouse.

As explained by The Mortgage Reports, if your spouse wants to keep your house, there are a few ways this might be done but only one that ensures you will be able to be completely removed from any financial liability or impact related to the home and the mortgage. To achieve this, your spouse must refinance your existing joint mortgage into a new mortgage in their name alone.

Reviewing COBRA coverage guidelines

One of the elements that those preparing for a divorce in Manhattan Beach most often overlook is where will their health insurance coverage come from. Per information compiled by the U.S. Census Bureau, 67.2 percent of those insured in 2017 were covered under a private health insurance plan. Of that group, 56 percent were covered under an employer-sponsored group health plan. In such scenarios, the court will typically order that the parent whose employer offers insurance keep the kids on the plan. Yet what about their ex-spouse? Where are they to get their coverage from? 

The easy answer might be that they find a job that offers health insurance coverage as a benefit. Yet in many cases, those who spent years being covered by their spouse‚Äôs insurance might have difficulty immediately securing gainful employment. Fortunately, the Consolidated Omnibus Budget Reconciliation Act allows one to retain insurance coverage once their official affiliation with the entity that sponsors their group health plan coverage has ended.  

Why is the valuation date in your divorce case important?

When preparing for divorce proceedings in Manhattan Beach, there are a number of important dates that you will want to keep at the forefront of your mind. One of these is the valuation date of your marital assets. You may at first question why the exact day on which your marital assets are appraised and valued would be important, yet in many scenarios (particularly if you or your soon-to-be ex-spouse are small business owners), this information could potentially help you from suffering a significant financial loss. 

Divorce often involves a good deal of emotion, and that emotion can conceivably manifest itself in many areas. Say that your ex-spouse runs a small business who operations you have contributed to. As the value of that business (or at least a portion of it) may be subject to property division, they might see an opportunity to purposely diminish your interest in it. The counterargument to this may be that by doing so, they also devalue their own stake in the business, yet depending on how they feel towards you (and the circumstances that contributed to the end of your marriage), they may be willing to accept the loss (knowing that once your divorced, they can start another business again in the same sector). 

Divorce as a factor in poverty

Residents in California who are getting divorced often struggle with how to split their marital estate. Losing any amount of their shared assets can be hard but some research is now showing that the impact may be quite severe for some people, especially for couples who get divorced in their 50s, 60s or beyond.

When a married couple over 50 splits up, the event is referred to as a gray divorce in reference to the typical graying of one's hair at this stage of life. Gray divorce can be a serious financial event for people as they have fewer years left to work and to recoup any losses they incurred during their divorce. However, it seems that divorce at any age can leave people at risk of experiencing poverty later on.

California adoption basics

Many in Manhattan Beach may have dreams of growing their families. Most might assume that would mean having children, yet there are certainly other methods through which one's family can expand. Adoption ranks among the most popular of these, with The National Council for Adoption reporting 110,373 adoptions having occurred as recently as 2014. Assuming legal responsibility for a child or teen can be a complex process, one that those who are interested in should thoroughly understand prior to commencing. 

First and foremost, California law states that any minor child can be adopted by an adult, yet there are some restrictions on who can adopt. Section 8601 of the California Family Code states that a person pursuing an adoption must be at least 10 years older than the child or teen they wish to adopt. The only exception to this rule would be if the potential adoptive parent shares any of the following relationships with the child or teen being adopted: 

  • Stepparent
  • Sibling
  • Aunt/uncle
  • First cousin

Even wealthy couples can have money battles

Money-related conflicts are common in marriages. Even relationships that are otherwise solid can break down when finances are an issue, especially when the spouses did not take the time before marriage to discuss and understand each other's financial mindsets. For some California spouses, money is symbolic of other, deeper things, such as trust, security and selflessness.

The most serious and potentially devastating money conflicts do not always arise from a lack of money. Even if you and your spouse have significant assets and comfortable incomes, you are not immune from misunderstandings that can blossom into irreconcilable differences.

Is alimony awarded in every divorce case?

The automatic assumption that many in Manhattan Beach may have going into divorce proceedings is that one said will be required to pay the other alimony. If you follow this same line of thinking, then you should know that spousal support or maintenance (other terms for alimony) is not automatic. The court considers a number of different factors when determining if alimony is truly warranted in your case. 

The goal of alimony is to allow both you and your spouse to maintain a similar standard of living to the one that you achieved while you were married. Thus, the court will determine what each of you needs in order to accomplish that, and how much you both can currently afford toward that end. Per The Judicial Branch of California, it will also consider factors such as: 

  • How long your marriage lasted
  • Yours and your spouse's respective ages and states of health
  • Yours and your spouse's debts and property
  • The tax implications that may come with alimony payments
  • If maintaining a job would make it difficult for one of you to take care of your children
  • If there were any accusations of domestic violence or abuse during your marriage

Reviewing the rules for parental relocation

Life will indeed go on after your divorce in Manhattan Beach. That may eventually lead you to want to move away from the area to pursue other relationships or professional opportunities. One thing that could potentially complicate a relocation, however, is your custodial situation. Many in your same position have come to us here at Rombro & Manley LLP asking how they can make a move work while still maintaining their current custody arrangement. The answer to that question depends on the circumstances of each individual's custody case. 

You are right in assuming that you cannot just move away with the kids; you need to provide both the court and your ex-spouse prior notice. Yet according to The Judicial Branch of California, if you have sole custody of your kids, then you do not need to explain your reasons for wanting to relocate. Rather, the burden falls to your ex-spouse to show the court why relocating would be bad for your children. 

Dividing up a 401k

Those entering into property division proceedings in Manhattan Beach may be surprised to discover that their 401k's will inevitably end up on the table. That fact should not come as a dramatic shock, however; 401k contributions come from one's income, and as any income earned during a marriage is considered marital property, so too would any contributions made from it. 401k account holders should realize, however, that the total value of their accounts may not be subject to division; rather, only those contributions made during their marriages are divided. 

Still, there may be a way for them to retain the full value of their 401k accounts. According to the 401k Help Center, one can offer to relinquish their claim over another marital asset of equal or comparable value in exchange for the right to keep their entire 401k. This may be preferable to many given the income generating potential that their retirement accounts offer (and conversely, the impact on that potential that removing a significant portion of its funds may have). If one's spouse is unwilling to give up their claim to their portion of a 401k's funds, then the next best option may be to have the court issue a Qualified Domestic Relations Order authorizing their portion of the funds to be released, and then rolling them into a separate retirement account. 

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Manhattan Beach, CA 90266

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