Recently in Property Division Category

May 29, 2014

Highest Court in California Rules Life Insurance Policy is Community Property

bank-loan-concept-2-1415802-m.jpgWhen people get divorced in California, the law mandates that their "community property" be divided equally between them. This means that any property accumulated during the marriage, with the exception of inheritances and gifts, is subject to even distribution. While this sounds like a simple premise, if the spouses have property and assets of significant value, the whole procedure can become complicated fairly quickly. To ensure that you are sufficiently aware of the marital assets to be divided between you and your spouse, it is important that you consult with an experienced San Diego family law attorney as soon as possible.

Properly preserving the right to marital property that is eligible for distribution has the potential to affect each spouse's future financial position. By most accounts, this is a critical phase in the proceedings. One challenging aspect is determining what is separate and community property, respectively. A recent court of appeals case involving Frankie Valli and his wife, Randy Valli, addressed the issue of whether a life insurance policy is deemed community property to be split during the dissolution of the marriage. The parties had been married for 20 years when they decided to separate in 2004. The year before the separation, the husband used community property funds from a joint back account to pay for a life insurance policy valued at $3.75 million. His wife was named the sole owner and beneficiary.

At trial, the court determined that the life insurance policy was community property because it was acquired with community funds during the marriage. In crafting its judgment, the court awarded the policy to the husband but required him to buy out his wife's interest, namely one-half of the policy's cash value at the time of trial. The court of appeals reversed, concluding that the insurance policy was the wife's separate property.

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April 24, 2014

Wife's Conduct During Divorce Proceedings Factors into Court's Division of Marital Assets

market-movements-3-1388613-m.jpgDivorce is often synonymous with acrimony. Whether you live in San Diego or New York City, divorcing spouses typically face many difficult and potentially divisive issues, such as spousal support, identification and division of marital property, child custody and support (if there are children from the marriage), and many other logistical, financial and emotional considerations. And while some cases are worse than others, in terms of the extent of the spouses' civility and courtesy toward one another, there are couples that, with the proper guidance, can dissolve their marriage in an efficient and civilized manner. Reaching out to an experienced family law attorney, who is fully familiar with the legal procedures in and around the San Diego area, will surely help the parties to approach the case with poise, dignity and a strong sense of what they can expect every step of the way.

A recent case making news headlines on the east coast is a prime example of the need to "keep your cool" during a divorce proceeding. A New York judge found that the wife's conduct in bad mouthing her husband on various websites and in a New York newspaper article, contributed to a decline in value of the husband's partnership (along with the economy). According to reports, the wife was the source of a newspaper article that reported that the husband bought a $215,000 diamond engagement ring for his "model fiancée" - but allegedly refused to spend $12,000 for his daughter's hearing aids.

The husband is a corporate partner at a law firm. He claimed his earning potential is largely derived from his ability to bring in business. At trial, the husband argued that his wife's conduct from the beginning of the divorce has interfered with his ability to retain clients, causing the value of his partnership interest to decline. The court found that the evidence established that the wife's Internet postings injured the husband's professional standing and ability to keep his clients, citing "incessant postings and discussions about her husband."

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March 13, 2014

California Man Who Hid Assets in Divorce Gets 17-Year Sentence

handcuff-449966-m.jpgDivorce has the potential to bring out the worst in people. There are many significant issues to resolve before the parties can go their separate ways, such as child custody and support, division of property and spousal support. When the soon-to-be ex-spouses cannot see eye to eye on these all-important matters, disputes can arise and the negotiations can become more and more contentious. In an effort to minimize the animosity between the spouses and to move the process along efficiently and smoothly, it is important to consult with an experienced family law attorney from the San Diego area.

One of the most important issues to resolve is the division of marital property. In order to do that, parties must be able to find and identify marital property, subject to division. Fortunately, state law provides some guidance in this area. California is a "community property" state, which means that a marriage renders two people -- one legal "community." In effect, property that the couple acquires during marriage is "community property." In some cases, deceptive spouses attempt to conceal or hide joint assets in an effort to avoid division of the assets in divorce. Another tactic is to file a fraudulent bankruptcy petition.

In a recent case reported in the U-T San Diego, a man was sentenced to 17 years for his efforts to conceal millions of dollars in assets in divorce and bankruptcy. According to the news reports, the man told his wife that he would file for bankruptcy so that she would get "nothing, including child support." The couple split up in 1999. Between 1999 and 2005, the man reportedly concealed millions of dollars in assets by placing them in other people's names. In 2005, he filed for bankruptcy protection. In 2008, a California court of appeal ruled on the divorce case and said in the ruling that it was the husband's "unstated but apparent view that if he can conceal his finances long enough he will not have to support his children."

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February 13, 2014

California Court of Appeals Sets Forth General Law Regarding Division of Marital Property

mortgage-and-money-6-966070-m.jpgCalifornia is a community property state. This means that marital property -- items acquired during the marriage -- will typically be divided equally upon divorce. A significant part of most divorce proceedings is identifying (and then valuing) marital property. But there are many complicated factors to take into account, such as whether one spouse or another separately holds the title to any of the property accrued during the marriage. To protect and maximize your rights in a divorce proceeding, it is essential that you contact an experienced family law attorney who is well versed in the local laws and the San Diego court rules and procedures.

In a recent California court case, the wife appealed from a judgment in her marital dissolution action. She argued that the trial court erred by identifying certain property as belonging solely and separately to her husband, including real estate as well as rights and benefits in a pension plan. The couple's first marriage together lasted from 1974 to 1986 when they divorced. They chose to remarry in 1990 but later separated in 2007, and are now going through their second divorce. At various points throughout these proceedings, the parties were represented by counsel, but as of the date of trial, both spouses were representing themselves.

Before, and during their marriage, the parties acquired various real properties in California, Nevada and Mississippi. At some point after the separation, the court approved the parties' stipulation that they each would retain temporary possession of certain personal property that they would not sell or otherwise dispose of until the court issued an order. The trial lasted two days and each spouse presented various items of evidence. The court ultimately handed down several findings, identifying certain real properties as belonging separately and solely to each of the spouses, respectively. The court also awarded each party the furniture and furnishings currently in his or her possession.

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December 26, 2013

California Court of Appeals Reviews Characterization, Valuation and Division of Wife's Bonuses in Divorce

dollars-1412644-m.jpgWhen it comes to divorce and the division of property, spouses should understand that California is a community property state. This means that an integral part of the marriage dissolution process entails the characterization of property as community, separate or quasi-community. This is a critical stage in the divorce proceedings, as proper characterization of property can impact the family's lifestyle long after the parties have gone their separate ways. A San Diego family law attorney, with extensive experience handling divorce and related matters, can be a tremendous asset when working through property division issues.

Under California Family Code section 760, there is a presumption that any property acquired during the marriage, by either spouse - other than by gift or inheritance - is considered to be community property (unless traceable to separate property sources). In order to determine whether property is community or otherwise, the parties (and/or the courts) must ascertain the time period during which the property was acquired. In a recent unpublished decision, the court of appeals was asked to review a trial court's ruling concerning the characterization, valuation and division of a wife's employment-related bonuses. In this case, there were several bonuses at issue, either conditionally received or earned from her employer before the couple separated.

The spouses argued over whether and to what extent the husband was entitled to the wife's "book of business" and certain bonuses that her employer, Wells Fargo, conditionally agreed to pay her. The trial court awarded the wife's book of business to her, concluding that since she could not sell her client list, it had no value and the husband, therefore, had no interest in it. The lower court also ruled on the status of several other bonuses, holding that a portion of a "transitional" bonus was earned before the separation and constituted community property subject to division. As for the other bonuses, the court ruled that they were the wife's property because they were not paid or due until after the parties separated.

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December 19, 2013

Secretion of Community Property Assets Through Pension Plan Not Protected by Federal Law (ERISA)

dollar-in-a-box-1-1086817-s.jpgUnder California law, any property that a couple accumulates during the marriage is considered "community property." Likewise, any debt acquired becomes "community debt." Both assets and debts are typically divided equally upon divorce. Determining the property and debt that belongs to the marital property can be very complicated. Properly identifying, valuing and dividing the assets and debts is a very serious part of the divorce process, one that can have lasting effects on the parties involved. If you are facing divorce, it is critical that you contact an experienced family law attorney who is fully familiar with the process in the San Diego county court system.

A recent case illustrates one of the problems that can arise when the divorcing couple is working toward assessing the community property that will ultimately be divided between them. Here, the couple married in 1993 and the husband filed for divorce in March 2003. The court ordered the husband to pay spousal and child support, but at some point he fell behind in his support payments. Once that happened, the California Department of Child Support Services got involved and issued an order requiring Morgan Stanley to withhold funds from the husband's retirement accounts in order to collect child support arrears.

Throughout the lengthy proceedings that began in 2003, the spouses filed many motions and opposing responses, all in an effort to resolve questions about the division of assets, namely, the husband's defined benefit pension plan. In late July 2010, the trial court issued a temporary restraining order prohibiting the husband from transferring any funds in any Morgan Stanley account in his name, the name of his law firm or its pension plan. Two weeks later, the husband transferred approximately $100,000 from his pension plan into his Merrill Lynch trust account.

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October 10, 2013

Division of Property in Divorce Can Be Tricky: Tips for San Diego Spouses

my-last-cash-5-1138574-m.jpgCalifornia is a community property state, meaning that upon divorce, marital property (as well as any debt owed) is typically divided evenly. This is one of the most important and potentially impactful parts of a divorce proceeding. Identifying, valuing and dividing marital property can affect the whole family's future in significant ways. The risk of making a mistake during this particular phase of the process can be very costly down the road. Anyone in San Diego who is contemplating divorce is encouraged to contact a local family law attorney with experience handling all aspects of a family law case.

Under California law, there are several ways to characterize property in divorce, and certain categories are subject to equal division between the spouses while others are not. The first type is "community property," or property that the couple acquires during the marriage. It includes everything the couple purchased or attained while married -- including debt. What some people may not realize is that gifts and inheritances do not fall within the definition of community property and are not subject to division, even if attained during the marriage.

Community property covers not only earnings during the marriage, but anything purchased with those earnings. Essentially, each spouse owns one half of the community property. This includes any debts that were incurred during the marriage as well. Spouses may not realize the extent of the community property and debts and may want to seek the help of an attorney to sort it all out. The U-T San Diego recently ran a piece describing one woman's quest to get a hold of her inheritance assets that had been managed by her husband. They are now in the middle of a divorce and he has refused to tell her where the money is. The bottom line is that the inheritance money and related assets belong to the person to whom it was given.

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September 19, 2013

Husband Indicted for Hiding Millions in Divorce Proceedings

dollar-army-1-1162216-m.jpgA recent news report underscores the extraordinary measures some people will take to hide assets from their soon to be ex-spouse. After being married for 28 years, Sheila Brandner filed for divorce in Alaska in 2007. According to the indictment by the United States' Attorney's Office, her husband Michael Brandner, a 64-year-old plastic surgeon, reacted to the divorce filing by secretly planning a scheme to defraud his wife by hiding assets from her. In any divorce proceeding, a huge issue is the division of marital assets. The ultimate outcome can significantly impact each spouse's lifestyle and comfort. Seeking the help of a local San Diego family law attorney with a record of success cannot be overstated.

The husband in this case is accused of setting up fake companies, loans and accounts in California, Colorado and Central America, to prevent his wife and the court handling the couple's divorce from learning the extent of his wealth. The indictment alleges that Brandner sought to hide property and money for his "personal control and use," and he allegedly did so through two corporate entities he created. The government seized more than $4.6 million from a bank in California that was deemed to be part of the scheme. According to prosecutors, the money was seized as Michael Brandner was trying to hide it via a fraudulent investment that ultimately would have been written off as a loss, when in fact he would still have the funds.

Fortunately in this case, the authorities were able to identify and locate the marital funds that the husband was trying to conceal. Identification of marital property is a critical component to every divorce case. California is a community property state. This means that the law treats married couples as one "legal community." Therefore, any property acquired during marriage is deemed to be "community property." Likewise, any debts that the couple acquires during the marriage also belong to the "community debt." All items must be divided equally.

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September 5, 2013

Divorce Settlement Could Include Cost of Wife's Egg-Freezing Procedure

roads-sign-869848-m.jpgIn dissolving a marriage, divorcing spouses typically must sort through many important issues, such as spousal support, child custody and visitation, and child support, to name but a few. Add to these items the matter of a woman's fertility -- and spouses may have yet another, unexpected item to negotiate at the bargaining table. Navigating the San Diego family court system can be complicated and overwhelming, especially when facing the end of a marriage. It is vital that you contact an experienced, local family law attorney to help you get through the process with ease and a sense of confidence in the outcome.

According to a news article, a woman from New Jersey is asking her soon-to-be ex-husband to pay $20,000 for costs associated with an "egg-freezing" procedure, with the hope of preserving her fertility after the divorce. The couple had been married for eight years and had always anticipated that they would have a family. The wife is now 38-years-old and getting divorced. During the marriage, she had an expectation of having children. With the advent of fertility treatments, and advances in medical science, women now have the opportunity to preserve their eggs until they are ready to bear children. With this opportunity comes a way to measure the value of fertility: costs associated with egg extraction surgery, the number of eggs one can expect to obtain and preserve, freezing, the number of children one hopes to have, as well as the success rate of the clinic used. That amount is estimated at anywhere between $5,000 and $13,000.

In this case, the couple made several attempts at in-vitro fertilization during the marriage. The wife's attorney is suggesting that because of this, fertility treatments were part of the marriage and should be considered part of the marital lifestyle and, therefore, maintained as much as possible after the divorce. There is no state case law precisely on this issue. In some rare cases, courts have recognized the limits of a woman's fertility and awarded her custody of previously fertilized embryos. As the article indicates, the question of whether the cost of egg freezing should be included as part of a divorce settlement is complex.

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July 4, 2013

California Supreme Court Rules Pre-Marital Military Service Credit Not Community Property

1193021_dark_dollar_2.jpgCalifornia is a community property state. This mean that in places like San Diego, and in cities throughout the state, all assets (as well as debts) that have been accumulated during the course of a marriage should be divided equally in divorce. Identifying marital property and properly assigning value to such items is not always a simple task. There are times when the courts have to get involved to determine the extent of community versus separate property, and how it should be divided. Laws pertaining to the division of property upon divorce can vary from state to state. It is important to contact an experienced, local family law attorney who can protect and maximize your rights to a fair and just settlement.

In California, it is established law that retirement benefits attributable to service rendered during a marriage are considered community property, divisible equally in divorce. But as we can see in the recently decided Supreme Court decision discussed below, the matter concerning the extent or limitation of community property is not necessarily clear.

In this case, a husband rendered his military service before the marriage from 1982 to 1986. He began working as a firefighter in 1989. The Fire Authority participated in the California Public Employees‟ Retirement System (CalPERS), which afforded husband the option to purchase up to four years of service credit towards his retirement benefits for his military service. The couple married in May, 1992. During the marriage, husband exercised his right to four years' worth of retirement credit for his premarital military services. Husband paid for the additional credit at least partially with community property funds.

At issue before the court was how much, if any, of the value of the four additional years of credit is community property. In determining whether retirement benefits are separate or community property, the court looked at the husband's marital status when the services on which the benefits are based were rendered. The court agreed with the trial court's conclusion that because the husband's military service was rendered before the marriage, the four years of additional credit are the husband‟s separate property. The trial court ruling compensated the wife for her share of the community's interest in the property. The Supreme Court affirmed the decision, holding that the court acted within its discretion in awarding the wife one-half of the amount (plus interest) that the community spent to obtain the credit.

Identification, valuation and division of marital versus separate property can be complicated, and often is the cause of many unexpected disputes between divorcing spouses. Here are some items to consider: 1) will retirement accounts be part of community property; 2) are there business accounts; 3) has one spouse tried to hide assets in anticipation of divorce; 4) will a house be valued at purchase price or current fair-market value; and 5) are there joint loans that you will continue to be liable for after the settlement is reached?

Identifying all marital and personal property as part of a San Diego divorce case is critical to winning what rightfully belongs to you and securing the quality-of-life and financial well-being for you and your family.

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June 13, 2013

Finding Hidden Assets Can Be a Big Part of Divorce Proceedings

1149867_army_of_dollars_1.jpgIt would be terrific if all divorcing couples in San Diego and throughout California were open and honest about their marital finances, namely, the assets to be allocated between the spouses. Because California is a "community property" state, all marital property, debts and assets alike, should be divided equally. But estranged spouses have been known to conceal or otherwise channel marital funds into unknown repositories, in order to avoid sharing the accrued marriage wealth. If you are contemplating divorce, it is imperative that you contact a local attorney with a great deal of experience assisting clients in securing the optimal divorce settlement.

A recent Bloomberg article recounts the many ways that business owners seek to hide money, in an effort to save on paying taxes. If and when this business owner -- and his or her spouse -- decide to divorce, the owner often continues this fraud to try to "shortchange" the estranged spouse when it comes time to divide the assets. In effect, the hidden money reduces the value of the business, which is, in all likelihood, part of the marital property to be split evenly.

Spouses who are not involved in business matters are, nonetheless, typically in a unique position to know the true value of a business. After all, even though a certain number is reported as the business owner's official salary, their lifestyle and other expenses may reveal that much more money is earned than is reported. One reporter indicated that many professionals find ways to "hide" income by either understating revenue or inflating their business expenses. In divorce proceedings, many businesses coincidentally see their profits drop drastically right around the time that the married couple decides to separate. It is suggested that judges have seen this occur time and time again.

There are many other ways that a spouse may attempt to hide property during a divorce: 1) delaying raises, stock options or bonuses until after a divorce is finalized; 2) waiting until after a divorce is finalized to sign lucrative financial, business or other contracts; 3) paying a friend, relative or business partner for services not rendered; 4) skimming cash from a business or personal account; 5) hiding valuable assets, such as artwork, antiques, or hobby collections; and 6) hiding investments or cash.

Despite a spouse/business owner's attempts to hide assets from an estranged spouse, there will usually be warning signs, such as a rich lifestyle, including expensive dinners and costly social engagements.

Identification of property is critical in a divorce case. Determining what is considered a marital asset, and identifying all assets to be considered, can have a dramatic impact on your case. It is also important to be aware that one spouse may attempt to empty a joint bank account or run up huge cash advances or credit card debt in preparation for a divorce.

Unfortunately, divorce has the potential to bring out the worst in people. The best course of action is to have an experienced attorney on your side to help vigorously protect your share of the marital assets, in an effort to achieve a fair settlement.

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June 6, 2013

In a California Divorce, Who Gets Custody of the Family Pet?

1421011_kitten_and_terrier.jpgIn San Diego, and in many cities throughout the country, pets are considered property, items to be allocated between the spouses much the same way other items of value are divided. Because California is a community property state, the couples' marital assets will be divided according to a 50-50 split. In most cases, the family pet would fall within that category. But, according to an article posted on the Animal Legal Defense Fund website, courts are beginning to intermittently acknowledge that a family's relationship with their pet may not adequately be categorized as "property" to be neatly assigned at the time of divorce. For assistance deciphering the local laws and climate of the courts in your jurisdiction concerning the handling of pets in a custody case, it is important to contact a local family law attorney to help clarify your potential rights.

The Humane Society of the United States reports that in 2011, there were approximately 78.2 million owned dogs and 86.4 million owned cats in the country. The data also indicates that 39 percent of U.S. households own a dog, while 33 percent own a cat. Further, we are spending great sums of money on the health and well-being of our pets: on average, dog owners spent $248 each year on veterinary visits, while cat owners spent $219 annually for routine vet visits.

As more and more people view their pets as part of the family, and in many cases, feel a strong emotional bond with their pets, it is no surprise that the courts have also begun to treat the custody of pets differently. As the law stands right now in California, courts would still consider a family pet to be community property, divisible at divorce. But because pets are becoming an even greater part of our lives, some courts have treated dogs like children, pondering what is in the best interest of the pets, in deciding who gets custody of them. According to one article, some courts have even awarded shared custody, visitation and support payments to the owners of the pets.

Most judges are extremely busy, with crowded dockets and serious matters to consider. Divorcing parties may be advised by their attorneys to settle the matter of pet custody ahead of time, so that their wishes can be finalized in the court order. If the parties cannot reach a mutually acceptable resolution, and a judge agrees to hear and decide the pet custody dispute, there are several factors which may be relevant: 1) whether one of the spouses owned the pet separately before getting married or whether they acquired the pet together, during the marriage; 2) who has been the primary caretaker of the pet over the years, that is, which party brought the pet to the vet, walked and fed the pet and spent the most time with the pet; 3) which spouse is the pet more attached to; and 4) if there are also children involved, which parent is going to receive primary physical custody of the children, who are most likely also attached to the family pet.

We seem to be on the cusp of some potential changes in the area of pet custody law - due to the evolving nature of our relationship with our pets and the willingness on behalf of many parties to fight for custody. But for the immediate time being, pets are considered property, to be divided between the spouses.

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April 25, 2013

In California, A Spouse's Business Debts May Be Divided Evenly in Divorce

1415802_bank_loan_concept__2.jpgDivorcing couples in San Diego, and throughout the state of California, have the complicated and emotional task of sorting through their community property to determine how to divide the assets. But spouses on the verge of divorce should also pay close attention to the debts that have accumulated throughout the marriage. Those too may be equally allocated. Each state has its own set of family laws and procedures to follow. In matters concerning property division, the importance of hiring an experienced, local divorce attorney who is well-versed in the particular laws of California, cannot be overstated.

The extent to which a spouse inherits the other's debt depends in large part on the laws of the state within which they were married. Because California is a "community property" state, debts incurred during the marriage will be evenly divided during the divorce proceedings. A recent Fox Business article focuses on what happens to a woman's credit after a divorce if her husband has a business credit card debt. The main message in the article was: the answer may vary from state to state. In most cases, it seems that the person who filled out and signed the credit card application agreement will be the one the company goes after in seeking to recover payment.

While the credit card company is known to go after the signatory when some type of wrong-doing has been detected, if the issuer of the credit card happens to win a judgment against that person, it can still seek the couple's joint assets to satisfy that amount.

There are many ways that people can protect themselves in such situations. Calling the credit card issuer directly to identify the signatory is one way to ensure that you will not be the one they go after in the event of a default in payment. Another way to protect your assets after a divorce is to make sure your funds are in your name only and clearly separate from your ex-spouse's. Of course, if the couple signed a pre-nuptial agreement, all bets are off and each party should consult with a local attorney to understand their respective rights under that contract.

Once a couple has decided to divorce, in order to understand what assets and debts you jointly have, a good idea is to make lists of everything you own and owe. Part of this task is to determine which items are considered community property versus separate property. Once you have that figured out, the logical next step is to calculate the fair market value of the assets.

Under California law, divorcing spouses are required to fill out and exchange with one another a "Schedule of Assets and Debts." Essentially, it is each party's financial declaration of disclosure. Spouses are encouraged to be open and honest in preparing the schedule of information. Even after the debt allocation is completed, there could still be issues that arise later on. For instance, when spouses agree to divide up the debts they owe, it is important to realize that the entities or people you owe the money to are not required to honor or recognize the arrangement between you and your spouse. There are many complicated issues that can arise from the division of community property, especially when it comes to marital debt.

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April 4, 2013

Under Community Property Principles, Impending Divorce Could Threaten Chief Executive's Control of Billion Dollar Oil Company

1388612_market_movements_2.jpgCalifornia is a "community property" state. This means that in the eyes of the law, a marriage makes two people one legal "community." In effect, when couples marry in San Diego, the wealth (and debts) they accumulate become community property, which entitles each spouse to one-half of the total amount. In the event of a divorce, community property and debts are typically divided equally. It is a widely accepted principle throughout the country; in some states it is referred to as "marital property."

A recent Reuters article describes the looming divorce between Harold Hamm, chief executive of Continental Resources, described as America's fastest growing oil company, and his estranged wife, Sue Ann Hamm, who has held "key posts" at the company over the years. The article focuses a great deal on the eventual division of marital property and how that will affect Harold Hamm's current controlling stake in Continental Resources, worth approximately $11.2 billion. It is unclear whether the couple had previously signed a pre-nup agreement and without one, the divorce settlement could split up Harold Hamm's 68% ownership of the company.

In this case, the company experienced a massive financial growth that took place during the course of the couple's marriage. According to the article, the stock share price increased virtually 500 percent during the five years following the initial public offering. The increase in the value of an asset during a marriage is typically deemed part of the marital property. And while this marriage falls under the laws of Oklahoma, many of the same legal principles apply as in California. In Oklahoma, just like in California, wealth that accrues during the marriage by the efforts of either spouse would usually be subject to equal distribution between the couple.

The court is expected to take a close look at what each spouse contributed to the increase in the business' financial worth. An interesting factor here is that Sue Ann Hamm was also working at the company during the marriage. In situations like these, when the issue of company control comes up in a divorce proceeding, it is reported that a spouse will likely get paid the value of the shares to which he or she is entitled.

Separate property, not subject to division between divorcing spouses, is anything that one owns before the marriage. For example, inheritances and gifts to one spouse even during the marriage are separate property. Further, rents, profits, or other money earned from one's separate property, and items one purchases with separate property are also deemed separate property.

For clarification, property is anything that can be bought or sold, such as a home, cars, clothing, or furniture. Property also includes other items that have measurable value, such as a business (as in the case here), bank accounts and cash, pension and 401(k) plans, stocks, security deposits on an apartment, life insurance with cash value, or a patent.

Determining what is marital or community property versus separate property can be complicated and typically has its roots in established local laws. Divorcing spouses are encouraged to contact an experienced Family Law attorney who practices in the San Diego area.

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October 11, 2012

California Court Rules on Division of Public Employee Retirement Benefits in Divorce

656184_25956468.jpgThe California Court of Appeals for the First District considered the characterization of benefits from the California Public Employees' Retirement System (CalPERS) purchased by the husband during the marriage, but based on services performed prior to the marriage. The case, In re the Marriage of Green, was a matter of first impression for the court. The trial court found that the benefits were the husband's separate property, but the appellate court reversed that ruling. It ruled that the benefits were community property, and remanded the case for determination of allocation between the parties.

The husband, Timothy Green, served in the United States Air Force for four years between 1982 and 1986. He joined the fire department in Dublin, California in 1989, and he married Julie Green in 1992. His employer participated in CalPERS, which included a program that allowed an employee who served in the military to purchase up to four years of additional CalPERS service credit. He exercised this right in 2002, using around $11,000 of community funds to purchase the credits.

The wife petitioned for divorce in 2008. The parties disputed whether to characterize the military service credits as separate or community property. The husband argued that the credits were separate property, because his right to the credits arose before the marriage. The wife claimed that they were community property because they were obtained during the marriage using community funds, and she sought a separate account for fifty percent of the credits. The trial court ruled that the credits were separate property, but ordered the husband to reimburse the wife about $6,700 for half of the community funds used to make payments.

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