What should I do to protect my finances now that we have filed for divorce?

If you are the person who asked for a divorce, you may be surprised by the emotional chasm between yourself and your spouse and how long the process is taking. You spouse may be shocked, hurt and feel confused by your decision and it can take time for your spouse to engage in the divorce process or “catch up”. Many of my clients are frustrated by this delay, but there are still steps you can take to prepare yourself for what happens next. Here are five financial steps that you should do after you file:

1.    Set up a divorce notebook.  Use a binder or file folder that have sides to them so that when you lift up the file, things don’t fall out the sides. There can be a lot of paper generated during your divorce and having those papers organized allows you to be more prepared and less disoriented.

2.    Open individual bank account(s) in your name. New accounts often have more restrictions such as deposit holds. The sooner you can start a history with a bank, credit union or other financial institution, the sooner you will establish credibility with that institution. These are accounts in your name individually, and minimally you need a checking account and a savings account.

3.    Apply for a credit card in your name. If you have kept your credit cards separate, then you already have individual accounts. If you’ve been operating your credit cards as joint accounts, however, you want to have an account in your name. If you’re not sure if you’ll qualify, then get your FICO credit score first.  Remember that whenever you apply for a credit card, you get an inquiry on your credit report.  

4.  Scan financial statements and documents. You’ll want to get into the habit saving and downloading any financial statements that you receive so that you have them at hand, or file them in your divorce file for easy access. These documents include investment and bank statements, tax returns (most recent two years), debt statements, social security reports (usually received before your birthday), and any other statements that have to do with assets and liabilities (debts).

5.    Get your credit report and credit score.  Your credit score will give you information about what your credit options are, and the credit report will let you know which of your existing credit cards are joint vs. individual, as well as letting you see if there are any financial items you don’t recognize.

You can contact me at Amanda@gordonfamilylaw.com for more information.

Personal Injury Damages - are they community property?

I was in a car accident during marriage but my case has not settled yet, what is the character of the money I recover from the car accident?

Who gets the proceeds of a personal injury settlement depends on cause of action arose and the parties needs. What's important to know is that in the case of personal injury damages, the court has discretion to award the entire proceeds to the injured spouse. 

If it's undisputed that the accident happened, and therefore the cause of action arose, during marriage and prior to separation, then the proceeds of the settlement are community property.  (Marriage of Klug (2005) 130 Cal.App.4th 1389, 1398-1399.)    (Fam. Code §§ 780, 2603(a); Hogoboom & King, Cal. Prac. Guide Family L., Ch. 8-B, § 8:267.) 

The statutory characterization rules apply to all compensation for damages arising from tortious injury to protected personal interests regardless of the source of the payment, i.e., whether by the tortfeasor or the tortfeasor’s liability insurer. (Marriage of Klug, supra, 130 Cal.App.4th at 1397; Meighan v. Shore (1995) 34 Cal.App.4th 1025, 1034 [loss of consortium damages]; Hogoboom & King, supra, at § 8:268.) 

However, the general rule of equal division for community property is modified in the case of “community estate personal injury damages,” and shall be awarded to the injured spouse unless the Court finds that the economic conditions and needs of each party, the time elapsed since the damages recovery, and any other pertinent facts of the case, demonstrate that the interests of justice require another disposition.  (Fam. Code § 2603(b).)  If so, the Court may allocate the damages to each party as may be just, provided the injured spouse receives at least one-half the damages so allocated.  (Id.) 

If you have questions about personal injury damages in the context of divorce, please reach out to Amanda@gordonfamilylaw.com  

Can parental rights be terminated without an adoption request?

Experienced bay area attorneys will tell their clients that yes, parental rights under Family Code Section 7822 can be terminated outside of an adoption proceeding.

Family Code section 7800 states, “the purpose of this part is to  serve the welfare and best interests of a child by providing the stability and security of an adoptive home when those conditions are otherwise missing from the child’s life.”

In In re Marcel N. (1991) 235 Cal.App.3d 1007, the court held that one’s parental rights may be terminated even when there is no pending adoption.  The Court found that precluding a single mother who is capable of raising her child from terminating the parental rights of the child's natural father should not be of less importance than allowing a remarried mother – whose new husband wishes to adopt her child to terminate the parental rights of the biological father.

Similarly, in In In re Marriage of E. and Stephen P. (2013) 213 Cal.App.4th 983 the Court found that terminating the father's parental rights was in the child's best interest, regardless of whether there was somebody waiting to adopt the child. 

If you are considering terminating parental rights or you are faced with a termination petition, we strongly recommend that you reach out to an attorney to seek counsel.  You can contact me with questions at amanda@gordonfamilylaw.com

Is rental income included in a support calculation?

Rental income where the income only covers the property expenses generally would not be included in a support calculation.

This is because the “cash flow” is the amount received in rent less what is being paid out, which includes mortgage principal and interest, taxes, insurance, and repairs among other real costs that equals the net income for support purposes before tax.  Only the net income is considered as part of income.  

What we recommend is to go to the rental property schedule of the tax return and add back the depreciation and subtract principal paid down not he mortgaged since only the interest part of the mortgage payment is an allowable deduction for the IRS.  Only if a party had remaining income AFTER paying the mortgage and such, that would be included in the support calculation.

Contact amanda@gordonfamilylaw.com to speak about your specific child support issues.

Can I ask my child's mother to pay for private school?

Extra education expenses are a challenging issue, especially when both parents can't afford private school. In this blog post we look at whether on parent can ask the other to pay for private school.

Children's Educational or Other Special Needs

A family court has discretion to increase the amount of child support beyond the support guideline amount to account for costs related to a child's educational or other special needs. Fam C §4062(b)(1). 

In order to obtain an order that a parent pay for private school tuition as an educational need, two conditions must be met.  First, the child must have a special educational need for private education, such as a gifted child or a child who suffers from a disability. See Marriage of Aylesworth (1980) 106 Cal. App. 3d 869, 879 (father ordered to pay private school tuition for epileptic son but not for daughter, absent evidence that attendance "would be of a more personal benefit to her than it would be to any child in general").  Second, the cost must be within the financial means of the payer parent. See Fam C §§4053(d), 4061(b)(2).

Summary of Private Tuition Issue in Aylesworth

In Aylesworth, the California Court of Appeal held that the trial court's order requiring former husband to pay for his son's private school tuition was correctly based upon the father's ability to pay and the mother's testimony at trial.  At trial, the mother established that her wealth had declined drastically since the prior order and she was in a deficit financial position, while the needs of the children had increased due to their growth, aging and the increased costs of living. In addition, her testimony established that the oldest child had educational difficulties due to  suffering of epileptic seizures.  The mother further established that the private school the child attended was able to give him personalized attention.  The trial court found that it was in the child's best interests to stay enrolled in a small private school where he received such personalized attention. The father was ordered to pay the yearly tuition of $2,400.

In reaching its holding, the Aylesworth court also applied Straub, which held that a child is entitled to an award of private school tuition where appropriate to his parents' income. Straub v. Straub (1963) 213 Cal. App. 2d 792, 798.  In his argument, Father claimed thatStraub was inapplicable because it had nothing to do with the needs of a child for private school caused by an alleged medical condition. Father also stressed the trial court's refusal to grant the mother's request that he also pay tuition at the same private school for their other child. Father further argued that the award of tuition for his son was an abuse of discretion since the purported medical need no longer existed because his son takes medicine to manage his epilepsy.

If you are interested learning more about education expenses, you can contact me at Amanda@gordonfamilylaw.com for more information.