A new spouses earnings will most likely not be considered when calculating a child support or spousal support order.

Effective January 1, 1994, trial courts may not consider as a factor rebutting the presumptively-correct formula amount of support the income of a parent's “subsequent spouse or nonmarital partner” ... except in specified“extraordinary cases.” This means that your current spouse does not have to worry about his or her income negatively effecting your support payment. This also means that a single parent does not have to worry that if they get remarried they will be charged with an order they cannot afford.

The only exception permitting consideration of new mate income in fixing child support is “extreme and severe hardship” to the child. Unless the supported child will suffer if the court does not look to the income of a new spouse or nonmarital partner, such income cannot be considered. Marriage of Wood (1995) 37 CA4th 1059, 1067.

As a general rule, courts will not revise a child support order unless there has been a “material change of circumstances.” This rule applies to any form of child support order—i.e.,whether pendente lite or “permanent.” Marriage of Stanton (2010) 190 CA4th 547, 553.

The reason for this is that once a court has issued a child support order or spousal support order they are assumed to have considered all the facts up to that point. It would be res judicata to litigate facts already determined by the court.

Marriage of Williams (2007) 150 CA4th 1221, 1234 states that the equivalent to “material change of circumstances” is needed for purposes of child support modification.

Absent a change of circumstances, a modification motion would be “nothing more than an impermissible collateral attack on a prior final child support, spousal support or child custody order.” Marriage of Stanton, 190 CA4th 554.

Many people avoid marriage out of the fear that the marriage will not last and they will lose all their money to lawyers and spousal support. With over half of all marriages ending in divorce, this is a valid concern.

However, what many people fail to realize, and are often shocked to find out, is that even without a marriage contract you may still have the same financial obligations to your partner in the event of a breakup. It’s called “palimony” – spousal support and property division, without a divorce.

Palimony, acknowledged by civil courts, may arise through a contract (implied or expressed) that you may have had with your partner, whether you knew about the contract or not. These obligations arise in same-sex relationships as well.

The following are 4 tips to avoid becoming an unassuming obligor to your partner in the event of a breakup:

Make sure you’re ready before you move in with your partner

While couples cohabitate for many different reasons, ranging from financial to convenience, be aware that cohabitation is the most important factor courts look at when deciding whether someone is obligated (including property division and spousal support) to their partner as a married couple would be – also known as “palimony.”

The landmark case on palimony is a California Supreme Court case involving actor Lee Marvin, and his relationship with a woman he never married. Among other things, the court in this case found that palimony requires showing a “stable” relationship arising out of cohabitation.

While the definition of “stable” in this sense, remains unclear, “full-time” cohabitation has been found to meet the definition. Examples of “full-time” cohabitation include both parties having identical primary addresses and both parties having things such as bills and other official documents mailed to the same address.

Since palimony obligations typically arise from the objective appearance of the parties’ behavior, partners should be careful with what they promise each other and be careful to not appear like a married couple.

Do not act like your married - if you’re not

While this tip may seem vague, it is easier to follow that it sounds.

It is important to be aware, that even though you may not “move in” with your partner, you may not be safe from spousal support and a division of your property. One court found that although the parties had never lived together “full-time,” a palimony obligation had been created, thus exposing the parties to spousal support and property division obligations.

In this case, the parties were found to have lived together two-to-four days a week in a long-term (over 17 years) relationship, and had held themselves out as husband and wife, raised a child together and jointly owned a home where they spent “family time.”

The court found it very important, in this case, that the parties had held themselves out to family and friends as a married couple.

The bottom line, if your friends and family think you are married, the courts might treat you as married, too.

Don’t co-mingle property and assets

While this may be along the same lines and #2, above, this is the advice most overlooked by unmarried couples who wish to have an unencumbered break up.

Joint bank accounts, buying houses together and making investments together are some of the biggest mistakes people make while not married, thinking that they will not be effected in the event of a break-up. While everyone can imagine that dividing a co-mingled bank account, or transferring ownership interest in a home, may not be the easiest thing in the event of a split, most people fail to realize that such actions can also expose both parties to palimony.  

After cohabitation, co-mingling property and assets is the second most important factor looked at by courts when determining if divorce remedies apply to a parties’ situation.

The easiest way to avoid running into this problem is to simply keep each other’s bank accounts and real estate holdings in each other’s name. In the event you do decide to get married, it is very simple to transmute such property to joint ownership interests.

Draft a “cohabitation” agreement

While this step may seem unnecessary, and even ridiculous, at the beginning of most non-marital relationships, it is important to understand that such an agreement can be drafted at any time during a relationship and still be deemed enforceable.

Also, such an agreement can be very simple to draft. If there are not may assets involved (or very standard assets such as cars, houses, bank accounts, etc.), an agreement can simply be handwritten explaining that the parties agree to keep each other’s assets their own in the event of a break up. Any future support to either party can also be waived in this agreement.

Contrarily, a “cohabitation” agreement can also be useful if the parties agree that one party will owe spousal support to the other party; or, if the parties wish to make an arrangement for dividing assets.

Either way, as long as the parties’ intents are clearly explained, a cohabitation agreement can be very easy to draft, and protect the parties from any surprises during a breakup.

The take away from all this should be that regardless of what type of relationship you are in, it is important to be aware of the obligations you may be committing to.  


Jeff Layfield, Attorney at Law
Los Angeles, CA
Layfieldlawfirm.com
(424) 248-7364

     

   How to Quickly Estimate a Child and/or Spousal Support Obligation

Besides, perhaps child custody, the biggest issue for individuals facing divorce is costs. One of the primary, and most contentious, concerns of any spouse facing a divorce is how much child support and/or spousal support they are going to owe. Or, in the case of a lower earning spouse, how much spousal support or child support they can expect to receive.

Many times the unknowns surrounding support may cause a spouse to become apprehensive about filing for divorce. A low, or non, earning spouse may worry if they will receive enough support to survive. On the other hand, a spouse who is the primary earner may feel apprehensive about proceeding in the divorce process if they are unsure about how much support they may owe.

However, what many individuals involved in divorce do not always understand is they have the ability to obtain a rough estimate of support payments, before hiring an attorney.

California Family Law, Section 4054 provides an algebraic formula to calculate child support; and, also provides a guideline spousal support calculation. The algebraic formula requires the use of net income to determine support. However, since net income often involves several varying components, the formula in California Family Law, Section 4054 is very rarely used in practice.

Instead, a computer software-assisted calculation is most often used by courts when determining child support and spousal support. The most widespread used software-assisted calculation is known as DissoMaster. The DissoMaster program determines the parties’ respective net incomes and then determines the correct support amount.

Although there are intricacies involved in determining which deductions to input into the DissoMaster program best advised by an attorney, as long as an individual can estimate the monthly gross income and custodial time share of their spouse, they can get a general idea of how much they can anticipate owing, or receiving, in child support and spousal support.

Computer software-assisted child and spousal support calculators are found for free on most California Court’s websites. Obtaining a rough idea of the child support and spousal support award in your case will save each party in legal costs and allow each party to better prepare for their future.

Furthermore, as a parent, be prepared to have sign up for Our Family Wizard to exchange messages with the other parent. 

                  5 Signs Your Spouse May Be Hiding Money From You

                               (And What You Should Do About It)

Unfortunately, in this day and age the word money is more synonymous with marriage than the, seemingly, once more important synonyms such as allegiance or life partner. In addition, the termination of marriage is at an all time high. Currently, 75% of marriages end in divorce. Source: www.Californiality.com (accessed May, 2012).

With that being said, although in recent years marriage rates have declined, there is no sign of the institution of marriage ending anytime soon. Therefore, every spouse should be an active financial participant in his/her marriage, both before the nuptials and, throughout the marriage. This is especially true if the other spouse is the breadwinner, or what is known as the “managing spouse.”

Having knowledge of the marriage finances is not only important during the marriage, but imperative in the event of a divorce. Many non-earning spouses become “lazy” during the marriage and do not inquire into the marriage finances-instead they rely on their spouse’s promises that they “will be taken care of.” This is very poor advice and gives the spouse a false sense of security. 

What many people do not understand is that, despite the fact that your husband or wife is the working spouse and handler of investments, any and all money earned during the marriage is a part of the community (meaning owned jointly by the spouses) in which each spouse has a one-half interest.

Spouses concealing money from each other is, not only unethical and illegal but, one of the most common occurrences in a marriage. The following are five of the most common signs that your spouse may be hiding money from you, and what you can do to ensure that you receive your proper share of the community estate, in the event of a divorce:

1.       Your spouse does not answer, or is candid in answering, your questions regarding the family finances.

Spouses owe each other, what is known as, a “fiduciary duty.” This duty, in essence, obligates the spouse in control of the finances to allow the other spouse access to all finances related to the community. In addition all finances related to any property acquired by a spouse before the marriage which may affect the community, must be made accessible. This includes access to all financial books related to: any businesses owned by either spouse or in which either spouse has an interest, investments, stocks, bonds, checking accounts, savings accounts, trading accounts, etc.

Therefore, your spouse is legally obligated to answer any questions you may have regarding the family finances and provide you with access to all information related to the family finances during the marriage. 

If your spouse refuses to answer questions regarding the family finances, this should raise a red flag, and is usually a sign that he/she is hiding something from you. Remember, even though your spouse may be the “working” or “earning” spouse, half of this earned money is yours and you have a right to know where it is, how much there is and how it is being handled, just as if you were receiving a paycheck yourself.

Also, having an interest in the family financial situation tends to give the non-earning spouse a sense of involvement and purpose in the family planning and may even result in the providing of constructive guidance and assistance to the managing spouse. 

2.       Your spouse keeps financial accounts in his/her name.

This is a common method employed when spouses intend to keep their earnings separate. There is a common misconception among married people that by keeping financial accounts in their name, alone, that it will separate the assets of these accounts from their spouse. 

This is not true.  Without a specific written agreement signed by both parties to the contrary, all earnings, regardless of what account they may be held, are community funds, and thus equally shared by the parties. Without a written, signed, agreement by both parties, it does not matter that money earned during the marriage is deposited into an account in one spouse’s name - this money is still considered community property. 

However, in the event of an impending divorce, many spouses will attempt to withdraw money from accounts and hide these funds in an attempt to avoid splitting the funds with their spouse. This is why it is imperative that spouses play an active role in the finances of the marriage so that they will have an idea of where money may be located, in the event of divorce.  

3.       Your spouse does not involve you in preparing annual tax returns.

Preparation of tax returns is the one time of year where every person is legally obligated to report all income to the IRS. This is also a time when business interests and financial accounts will be divulged and analyzed. In essence, preparation of an individual’s, and business’s, tax returns is the best way to get a “snapshot” of the financial situation of an individual and/or business. 

Preparation of tax returns is also a time when people may misrepresent their income. This is why it is important to be involved in the preparation of the tax returns. The preparation period is when all financial information is divulged and discussed (usually with an accountant).

In the event of a divorce, tax returns are a presumptively correct indicator of income for purposes of spousal and child support, and the burden will be on you to prove otherwise should your spouse be underreporting his/her income to the IRS.

There is no legitimate reason for your spouse to not involve you in the tax return preparation; and if he/she refuses to involve you, this is almost a sure sign he/she is hiding something.

4.       Your spouse, despite your showing of interest, does not involve you in the nature of his/her businesses.

Another common misconceptions among married couples is that if your spouse started his/her business before the marriage and he/she was the only reason for the business earning money during the marriage, that any money earned from the business is his/her separate money.

This misconception is pervasive among non-earning spouses. Not only is this not true, a successful business is often the greatest source of community assets. First of all, regardless of when a business was started, all earnings by either spouse during the marriage is community property and, therefore, either spouse owns such property jointly, and is entitled to half of its value upon divorce. Furthermore, in the case of businesses started by either spouse before the marriage, where the business increased in value during the marriage, that increase in value becomes part of the community (subject to certain, fact specific, rules).

Therefore, it is prudent that every spouse keep an active interest in any family business.

Anyone who denies their spouse an active interest in the family business is generally hiding financial aspects of the business that they want to keep a secret. Furthermore, in the event of a divorce it will be up to you, or your lawyer (who will be charging you an hourly rate), to analyze and value your spouse’s business; this can be a very time-consuming, costly, endeavor which can be greatly reduced through proper due diligence during the marriage.  

5.       Your spouse routinely uses cash for purchases.

Dealing with cash is by far the number one way people hide their income; not only from the IRS, but from spouses, creditors, lien-holders and anyone else who may have an interest in their assets. Cash flow is extremely difficult to trace and very easy to conceal. Furthermore, in this day and age with credit cards, debit cards, ATM cards, interest bearing savings and investment accounts, and free checking accounts, there is really very few legitimate reasons to be using cash for anything other than routine, inexpensive, purchases. 

Although, you may not know exactly where your spouse keeps all of the family money, as long as you have a good idea of how money is being spent, and where it is being kept, you will play an integral role in the division of the marital property, determination of child support and spousal support, and your spouse’s contribution to your attorney fees. 

Therefore, as you can see, every spouse, regardless of the status of their marriage, owes it to the well-being of themselves, their children and their future to be thoroughly involved in the finances of the marriage, from the beginning.

Jeff R. Layfield, Attorney at Law

As seen in Professor's House Publication