Divorce And Mediation Blog

The general rule is that when spousal support is ordered by a court, it is deductible by the person who pays, and taxable to the recipient. There are rules that apply, but they are relatively straight forward.

Occasionally, the recipient is a non-resident alien who decides to live in another country: Maybe they return from their country of origin, just want to get away, or they have family there - maybe they can make their support stretch farther. Some who have been married to American citizens for decades were here legally, but remained citizens of another country, and when the marriage failed decided to go to their homeland.

The taxability scheme assumes the government gets tax from one spouse or the other. Although the recipient is usually in a lower tax bracket, that is a bargain we make. When the receiving non-resident spouse moves to Italy, Poland, Japan, or Canada, for example, how does the government get its money? To often, no one asks that question, and finds out too late to solve problems created.

Well, there is an answer: The paying spouse withholds the money and sends it to the IRS. This does not apply in all cases, as there some inter-country treaties that eliminate the obligation. The risk to the paying spouse is that failing to withhold may make him or her liable for the tax that should have been paid.

Will the "document preparer" helping you fill out the paperwork to process your divorce have any clue? Of course not. Even most lawyers don't know the rule unless they attend the type of courses that teach these unusual rules - certified specialists are more likely to take such courses.

A Pennsylvania man has been indicted for sending an e-mail to Kentucky Senator Jim Bunning as a result of his efforts to stop a vote on extending unemployment benefits last February.

His crime may have been filling out a contact form on the Senator's website, incorrectly identifying himself as "Bruce from Louisville" in an effort to appear to be one of the Senator's constituents. He claims he didn't directly identify the Senator as crazy, but allegedly said ""ARE you'all insane," even though Bunning probably qualifies personally for that term. It is impossible to determine from the indictment what the man did, since the U.S. Attorney only quoted the vague language of the statute in the indictment.

There are two problems here: One is the basic due process right to be given knowledge of the charges against you, which we can't determine from the indictment. The other is the Constitutional right to "petition the government for redress of grievances", one of the rights granted by the First Amendment. It would be nice if the public could look at the indictment and actually determine what defendant is alleged to have done.

It will be interesting to see what the e-mails actually said. As for calling "Bunning" crazy, truth should be his defense. Age age 79, with an approval rating under 30%, he decided not to run again in 2010 because he couldn't raise enough money to fund his campaign.

Until last week, it has been generally assumed by many lawyers and CPAs that Domestic Partners, duly registered as such in California, may not divide their incomes for tax purposes, although the income may be treated like community property by the state.

In a recent publication from the IRS effective last Friday, that may no longer be true for tax years beginning in 2007. Because of a change in California tax law effective 1/1/07, this state has treated partners' income the same as that of married persons.

A major concern is the effect this may have on returns for the last 3 tax years, and whether amended returns are required or recommended. It does not appear they may file joint returns, however. It would just mean that each may declare one-half of the income of the other, potentially shifting much of the income tax burden to the lower earning partner at much lower tax rates.

If you are dissolving a domestic partnership, it is important that you contact a Certified Family Law Specialist who has knowledge of these rules and keeps up to date on recent changes.

There is one local lawyer in San Diego County who specializes in bashing the legal profession, and bragging about the ability to handle a complete divorce in a day: Mediating a settlement, gathering the financial records, drafting all the documents, having an agreement signed, and the case ready for filing with the court. Sounds attractive - especially if you are rushing to get an agreement signed.

That attorney brags of a 100% success record. Unfortunately, the claims are not justified by experience. While that attorney may be able to claim to have talked the parties into a settlement and signed most of the documents in that day, not counted in those bragging rights are the many cases that have later been set aside by a judge or by stipulation because they were unfair, or entered into without sufficient understanding of the law or facts. The same person instills fear in potential clients by telling them that letting some other lawyer near their case will end up costing them tens of thousands of dollars, making outrageous claims of the cost of the average divorce.

And the saddest part is that the work is of low quality, and often could have been handled more competently at lower cost. Two mature, reasonable people, can mediate with a competent mediator inexpensively, and do it right: They don't need to pretend they can or should wrap it all up in a few hours. Typically in my practice, we meet 2 or 3 times over several months; by the time we are done, each knows his or her rights and feels comfortable with the agreement. And we strongly suggest they at least consult with an attorney before signing.

As a concept, it sounds nice that two reasonable people who know what they are doing can go to an attorney, polish the rough edges off their agreement, and have all the paperwork completed quickly, efficiently, and cheaply. Unfortunately, that isn't what happens in practice when they try to do it in a day. One of the things I complain about in this blog is people with insufficient education and training performing mediation in the guise of protecting people from the legal profession and their own inability to reach agreements on their own.

Continue reading "Getting Your "Divorce in a Day": No Way...." »

I your spouse isn't working to capacity, you can ask the court to attribute to him or her an earning capacity for support purposes. But, how do you do that?

A vocational evaluation can be conducted to show the court that a party has the ability to work and that jobs are available. The evaluation is a means of having an expert conduct a study to provide the court with information about the ability of one or both of the spouses to earn more than they claim.

In our present economy, there may be few jobs available, but that doesn't mean that a spouse can remain unemployed for a long period of time and still continue to collect full amounts of child and spousal support, or avoid paying, as though he or she were incapable of working. The evaluation process is essential to get expert opinion to the judge who must make a determination - you can't just tell the judge how much they can make, or even what they used to earn in earlier days - only an expert can provide such evidence.

Once a judge has information that the party has job skills, he or she may order that the person make job contacts, and report them on a form listing the name of the company, the manner of the contact, to whom the person spoke, the job for which they applied, and the outcome of the contact. We often see those who we think are not anxious to find work making the required five or ten job contacts a week simply by logging onto the Internet and forwarding a resume - some judges require personal contact.

Most vocational evaluators will testify that jobs are usually found through personal contact (including family and friends), and that the success rate in sending a resume without such contact is very low. At least one appellate court has observed that it is easy for a person to avoid working if he or she wants, so the judge is ultimately required to make a gut reaction to a set of facts to determine whether the litigant is affirmatively seeking employment.

In one of my cases years ago, the non-working spouse would report on the court form, that she was going to an industrial park, usually on Monday or Tuesday, then going door to door passing out resumes and picking up a business card from the receptionist. Every two weeks, she would then report back 20 job contacts, but it was painfully obvious that she was only looking for work one day a week.

We suspected that she was actually working somewhere the rest of the time, probably under the table. The judge looked at her qualifications (fluency in four languages), the master's degree she had from college, and assigned to her a relatively high-income level, and ordered child support accordingly and ended the husband's spousal support obligation. A good vocational evaluation is essential to that process.

In the present job market, it is relatively easy to claim that someone is not earning a living in his or her chosen field, for example a real estate broker. A judge has to decide whether or not to push that person to look for work in some other industry, or try to weather bad times because the person was previously successful and will probably be successful again when the market picks up. In the long-run, the decision to pursue one career move or the other may affect the persons long-term ability to pay increased child or spousal support.

These kinds of decisions are left to the sound discretion of the trial judge. Whichever side of the issue you are on, your position is best presented to the judge by a certified family law specialist; and vocational evaluations are essential.

If you can present evidence of a pattern in the manner of job contacts, or even show that you have followed up to determine that the contacts were actually made, you are more likely to be successful in that process. If you treat it casually, or assume that the judge will simply believe in your position, you are likely to be disappointed in the outcome.

Hard economic times may have caused a temporary decrease in the divorce rate, but along with it, an increase in domestic violence. In a recent article, this phenomenon was discussed.

Economic stress, and the general failure of couples to discuss and understand family finances, are two of the prime causes of divorce. When times are tough, it seems that people learn to appreciate the stability of multiple possible sources of income, and the ability to make adjustments to keep the family unit flowing.

Unfortunately, people have a tendency to learn these lessons, but forget them as soon as money becomes available. Are we just building pent up demand to divorce because we aren't solving the core issues - lack of communication, and economic pressures?

A high percentage of potential clients who come to see me are unaware what the economic effects of divorce will bring to them, and often reconsider when they find out their life styles will change. And, it is surprising how many of them do not know what their spouses earn, what they have accumulated in savings and retirement, and how much debt has been emassed during the marriage.

While the divorce rate may be down temporarily, the number of crazies in the system seems to have gone up - people filing motions to set aside old judgments, apparently because they haven't been lucky playing the Lotto.

Today, courtesy of Google, I received a link to a webpage titled something like "Free Divorce Help in San Diego", followed by an advertisement looking like an article touting a private mediator with a law degree, but apparently someone who never passed the bar examine to become a lawyer. Aside from the irony of starting by offering free help, then charging, the page contained a lot of misinformation.

As with much mediator advertising, it was peppered with misstatements about the cost of the legal process. It reported that lawyers charge "at least $500 per hour" and many charge non-refundable retainers as much as $7500, and "total fees of $100,000 are not unheard of for a divorce."

Although legal services are expensive, let's set the record straight. In San Diego, the number of competent lawyers consistently charging $500 or more per hour is probably well under a dozen. Yes, a divorce can cost $100,000 or more, but that's because the parties are unreasonable and lousy candidates for mediation in the first place - and few lawyers have done cases that have gotten that expensive.

Retainers of $7500? Again a small number of lawyers, or those where the attorney knows going in that there is going to be a large amount of work to do, or there are other issues [a lot of property to keep track of, custody disputes, prior lawyers, a particularly obnoxious attorney on the other side] - and non-refundable retainers are generally prohibited in California, so you are only going to pay for the actual work needed.

And, this person bragged that most cases are mediated for less that $5,000: Now that's still a fine fee to charge if you are a lawyer, and in my experience far more than having a competent family law lawyer mediate your divorce and process it through the courts, as long as the people are reasonable and mature. Yes, most of us charge on an hourly basis for the work, so there is no limit, but you can have it done competently for less, in most cases.

One regular warning I make here is that you need to examine the credentials of the mediator: In my mind, it is more than taking a short class in how to help people reach agreements, and knowing some basics about the law. You want accurate information about your legal rights and responsibilities and knowing the mediator's thought processes have been honed by litigation, where biases and assumptions are tested daily. A J.D. degree means the person went to law school - it does not mean or imply the person knows the law, or ever competently practiced. Masters and Bachelor degrees are meaningless in choosing a mediator.

There is no substitute for education and experience as a family law specialist with years of litigation experience. Scare tactics to draw you in should be viewed with suspicion. If you can hire a true expert for the same price, why go to someone with a good sales pitch that lures you in with a promise of free or cheap resolution of your divorce? Someone who badmouths competitors on the basis that they are educated, knowledgeable, and experienced. There are a few, money hungry lawyers, whom you can't trust, but the vast majority know what they are doing and went into the legal profession because they wanted to be able to help people.

Today's San Diego Union contains an article on the front page with a headline that "S. D. County home prices inch higher." While this is certainly welcome news, it hardly serves as notice of the end of falling prices and is not enough to make settling divorce cases easier.

The statistics cited in the article refer to median home prices in the county - for those non-math majors, that means that one-half of the houses sold are above, and one-half below that median number. The increase, if you can call it that, is .5%, year to year for October. That can easily be a statistical anomoly, and not reflect an actual increase in prices, although the article does reflect a 2% increase in the number of sales - of course that increase is from the extremely desperate days of October, 2008, just before the election, when it seemed our financial world was about to end, which is probably not a good guide post from which to measure the market.

What I notice in my family law practice is that houses at the very bottom of the market are selling as a few buyers think they can pick up a rental propery cheap [especially based on early 2005 prices].

In one case, we have two houses to value; one in the $300,000 range, and one nearer $700,000. Because of delays, we've had two appraisals of each house - the same appraiser says that the less expensive house has actually increase in value about 10% in the last year, while it is opinion that the higher priced house remains unchanged. With the median at $325,000 [according to the article], it may just be that the bottom end has firmed up as buyers think they are getting a bargain, while the number of foreclosures and repossessed houses continues to keep the overall market soft.

Those few friends who are looking at houses in the range above $700,000, are finding they can buy nearly new, custom built houses far below the cost of construction - one friend remarked that the top end is equivalent of being given a free lot, then a discounted bid on building - he's interested in moving, but is really picky because he finds so much from which to choose - he doesn't have to suffer noise problems or bad layouts, as there are other houses on the market.

Before taking a step into buying a new house, think carefully. We may not be at the bottom. And, remember, one factor in keeping the bottom firm is that interest rates on these sub-jumbo loans remain very low, and money is available to many buyers in that price range. That does not necessarily mean that people are trading up, only that houses at the bottom are becoming attractive to investors, while pricing remaining a gamble. If interest rates rise, prices will drop. As always, be sure you have the financial stability to keep the property you buy even if housing prices and rental values drop, and interest rates go up.

As noted below on this blog, I provide health insurance for my staff because i care about their health, about them as people, and their productivity. I am concerned about the growing cost of health care, in part for that reason. I am also concerned because my health care and that of my spouse keep going up.

Last year, we changed our office policy to Costco, because it cut our rates substantially, even though the insurance comes from the same company I had before - apparently there is enough profit in health insurance that Costco can make something, yet the health insurance carrier [the same one we'd been using] makes a profit, and can still cut my costs. Anyway, last year, by changing policies, slightly increasing the co-pay by another $5, and our cost went up slightly - otherwise, it was scheduled to go up about 15% .

One year later, on our policy anniversary date, our rates will go up about 25% from that. Of all the wackadoodles who complain that a government policy or health coverage will raise their taxes or the deficit, I wonder how many have considered the rapid increase in insurance costs - from the looks of many of the loudest protesters, they are covered by Medicare, a government program they'd fight to the death to keep.

At 15% per year, health care costs will double every 5 years. At 25% [this year's increase], it will double every 3 years. The average is somewhere in between, we hope. The cost of health care and insurance is rising at least 5 times as fast as wages and earnings.

Total health insurance funded by my family will cost about about $26,000 this year, covering 6 people, aged 12 to 66, one of whom is covered by Medicare, so prior years' taxes cover part of the cost. Part of that is paid by my wife's employer, but it ultimately comes out of the money available to pay her a higher salary, just as more the cost of insurance for my employees limits what I can afford to pay them.

Health cost is in crisis because of these rapid increases that seem to be accelerating. Between 1/7th and 1/6th of the nation's economy goes to health care - and we don't have the best health care in the world despite the unsupported assertions of the opponents of reform. It is time to wake up people, and fix a broken system.

Tax breaks, or buying insurance from "out of state" companies that aren't regulated, isn't the answer. We need to get out from under the hundreds of billions of dollars spent by the health care industry [drug makers, health insurance, etc.] on things that aren't necessary [advertising, manipulating doctors, profits, huge bonuses, etc.], and vote for substantial changes. When we here that Medicare is rife with fraud, what we don't consider is that the fraud is perpetrated by capitalists [doctors, pharmacists, insurance companies] who are bilking the government system - it isn't the system that is corrupt, its the private sector.

Proposed reform isn't socialism, it's self-preservation. Our auto industry can't compete with the Japanese, in large part because it provides health insurance. Our small businesses are being eaten alive by health insurance costs. Nothing is working but the system of lobbyists bribing our elected representatives. We are being scared by fears of a socialist government, but if you ask people they think that means Communism, as in the USSR - they don't realize that the postal service, police, schools, Medicare, and national parks are all government owned businesses. We, as a society, are so far from socialism that the risk that our government will own most aspects of our economy is merely a myth, designed to scare us into submission.

The "socialism" we are lead to fear is a communist system, where everyone [in theory] earns the same no matter how hard they work, how much they save, how they sacrifice, and how much they create. A tax rate of 50% doesn't stifle competition, hard work, or imagination. In the 1950's, the top Federal tax bracket was 90%. We lowered it to 70%, yet that plus state and local taxes, didn't keep us from making us the most inventive country in the world, or the most economically successful.

Yes, we have taxes that are unfair - all taxes are unfair. The goal is to find a mix between paying for government and not eliminating our desires to improve our economic positions and be more successful than those around us, or our parents. The cost of health care really can't enter into the discussion - it is a problem that needs to be solved and none of the solutions offered by the right are designed to solve that problem. Using tax policy [deductions, credits, etc.] makes taxation more complex and doesn't directly attack the problem - it just ties into the idea that any tax is bad if it hits people with the money to pay it.

Yes, I don't like high taxes, but I also don't like health care costs out of control - does it matter where my money goes? Not really. If the government can get the rapidly rising costs under control, I'm for it - maybe that requires government health care, or maybe it only requires government competition. One way or the other, the problem needs to be fixed.

I am celebrating my 45 year as a registered Republican, but the party is trying my patience. I survived the Bush years, although in some financial disarray to my retirement accounts, but I expect Republicans to be reasonable - I'm about to publically recognize their drive for power makes reasonable thought impossible.

Capitalistic theory operates on the assumption that society advances economically when we are allowed to be rewarded for hard work and inventiveness. The Chinese seem to understand that lesson. What Teddy Roosevelt understood more than 100 years ago, however, is that unregulated capitalism leads to boom and bust cycles, aggressive monopolies, and periodic economic and social disruption. He tried to fight this battle with William Howard Taft, but lost to party politics and big money when he tried to start a 3rd party to do so.

Throughout the 19th Century [the 1800's for some of you], and into the first 30 years of the 20th, we largely had unregulated capitalism, banking, and investing. Every 10 to 15 years there were huge recessions or depressions. The Great Depression started regulation started by Teddy Roosevelt, and the lessons learned sustained those regulations for the next 70 years. The next 75 years, we have had recessions, but nothing like what lack of regulation had produced before. The current recession was headed to Depression until the government realized we need to solve the banking crisis and prime the pump - even George Bush recognized this need, and started the process.

Somewhere, there has to be a mix: Government intervention and control to permit capitalism to flourish without the havoc it is prone to create when it isn't controlled.

The Bush Administration taught us several good lessons: Don't appoint your friends to make decisions just because they are your friends, don't appoint people to positions governing who believe there should be no government, and open government so what it does is transparent - oh, and don't let the regulated draft the regulations.

Now if that sounds like the ravings of a liberal, I'm sorry, but I don't think I've changed that much since I supported Barry Goldwater 45 years ago - the arguments of the conservatives then aren't recognizable to conservatives today. That wing of society has gone over the edge.

Gone are the Republicans like Dwight D. Eisenhower, Teddy Roosevelt, Nelson Rockefeller, Jacob Javits, Everett Dirksen, and others, who didn't want government controlling our daily lives, but understood it served a purpose - in part to protect us from foreign enemies, and in part to provide services it could provide more effectively, more fairly, or more economically, than private industry driven by the profit motive or the need to create economic empires, irrespective of the impact on society.

General Motors has long known it couldn't continue to pay for health care for its employees and retirees, still build cars here and still complete against cars made in strange foreign cultures, like Canada. Part of the imbalance causing our present health crisis is that General Motors shouldn't be in the health care industry, competing against companies like Toyota that aren't. As an employer, I shouldn't be in that industry either.

If Republicans care about their country, as we claim, we need to participate in a process to effectively bring health care costs under control. At present, it looks like we are just trying to repeat our rhetoric [government bad, tax cuts good, pure capitalism perfect], and seeking to regain power. How much more effective could our elected representatives appear if they seemed to be part of the solution, rather than the problem? Trying to take advantage of those simpletons who think Obama isn't an American, or that Congress will pass legislation to kill old people, is a way of gaining power, but not of fixing the problems of society.

What the Conservatives are forcing on us is a 51% majority in Congress cramming a health system down our throats that we will be stuck with forever - wake up, quit trying to scare us all, and solve the problem. It's time for both sides to get together to solve the problem, and quit telling us we are going to be killing grandma. Otherwise, you won't like the solution.

Periodically, I get to complain about the high cost of being a Family Law lawyer. Last week, my network printer hit about 500,000 pages, and we'd been having periodic service calls - I had pledged to order a new one when we inserted the last laser cartridge - they run about $180 each, and I thought I'd try to squeeze out the last of them, and have a standby when it ran out - the printer cost $2500 when you could buy a car for that sum. I thought I could never burn it out, but who knew we'd print that much.

Unfortunately, one of the paper trays was pulled out to fill it, and wouldn't slide back in. So we decided to limp along with one tray, plus the envelope feeder. Then the remaining try started jamming. End of the road, I figure - cheaper to waste the new cartridge than pay for a service call. OK, so I got my money's worth, but it was supposed to last forever.

The direct replacement for an HP 5Sx we've been nursing along for the last year, is about $2500, delivered, and weighs close to 100 pounds. Individual printers for each staff member that last a long time just take up too much room, so when I bought this office, I decided networking would save each staff person desk space. Saturday, I get to bring in several people to help me cart off the old one and put the new one in place, so we can be up and running by Monday.

The copier is at around 1,000,000 copies - when we bought it we got a super deal - we had a close relationship with a repairman, who found a very slightly used machine for us, and replaced every conceivable part - essentially, it was brand new, and has served us well. Our service company got bought up by another company and it won't continue to fix the machine since it sells a different brand, so a new one is on the horizon. The new cost for the existing machine was $18,000 [no, I didn't pay anywhere near that], and my connection is long since retired - looking toward paying retail for a new digital/scanner/printer/copier/whatever it does. I feel like any day it will stop working.

Then there's our $3200 scanner. I know someday I'll need to start buying a service contract and having someone deal with that - it has been running daily for 1 1/2 years. It's been absolutely reliable.

Amazing how the paperless society has created so much paper. It's certainly helping me contribute to the economic recovery. And I won't talk about the new carpet and paint.

As we form our political and social views we are, of necessity, influenced by our personal experience. Those of us with money or jobs tend to have had health insurance all of our lives - in the family in which I grew up, not having coverage was unthinkable. In business, health insurance was historically a way of rewarding employees, keeping employees, ensuring a healthy, productive, and secure work force, and helping them keep their minds on work rather than the health of them and their family members. I can't imaging not having coverage, and not offering it to my employees.

I provide health insurance for my staff for all these reasons - on the one hand, it gives me an advantage over my competitors who don't offer the benefit - of greater importance to me is that people I care about don't feel they cannot go to the doctor when they have some minor problem [like a chest pain] out of fear of the cost of an office visit.

And, I don't want them to worry that their children might get sick, and they can't afford to care for them. But more than health care affecting me as an employer, as a Family Law lawyer it affects my clients every day and creates problems for many with which we must deal.

Each week, in one case or another, this is an issue we face. Sometimes it is as "simple" as trying to convince a client he or she needs to make insurance a higher priority, or guiding the client in a job search to a profession where it is routinely provided by employers [large companies, public agencies, etc.] Of greater difficulty is explaining to the soon-to-be ex-spouse that health insurance will soon run out, or may be extended for a number of months at a high rate. Lately, the job choice doesn't exist.

Commonly known as COBRA rights, many larger employers are required by state or Federal law to extend benefits to former employees or their former spouses as an extension of their prior policy. The COBRA cost is supposedly approximately equal to the regular cost of coverage [without subsidies, plus a small handling charge]. Sounds like a good deal? Last month I saw my first quote that caused me pause: My client's ex-wife would be paying more than $750 per month to keep her existing coverage after the divorce - she is in her 40's - that sum is not within her budget, but pre-existing conditions also keep her out of the market for a policy on her own.

Continue reading "Divorce in San Diego & Health Insurance...." »