Fiduciary Duties During Divorce and the Importance of Declaration of Disclosure

There are individuals that believe that being underhanded, dishonest, and non-compliant during a divorce is the better approach.  This is far from true and can potentially make their case much worse.  A good family law attorney will attempt to prevent such actions by their clients but it can also be said that attorneys can only advise against such malfeasance and can not control the actions of their clients.  The Family Courts also do not look kindly on and can punish a party that is involved in what would be considered sanctionable behavior. The parties should be mindful of their fiduciary duties during divorce.

In other areas of law, questionable legal tactics, trickery, and “hiding the ball” are more common.  However, the approach to handling a divorce case is considerably different.  Both spouses have fiduciary duties during divorce owed to each other.  Family Code section 721(b) in part states that spouses are required to have the, “. . . highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other.”  This includes disclosing all the important information regarding the parties’ assets and debts.  It clearly indicative that it is unacceptable to “hide the ball” or play games regarding community assets and debts.

Family Code section 1100(e) in part states, “This duty includes the obligation to make full disclosure to the other spouse of all material facts and information regarding the existence, characterization, and valuation of all assets in which the community has or may have an interest and debts for which the community is or may be liable, and to provide equal access to all information, records, and books that pertain to the value and character of those assets and debts, upon request.”

These duties and obligations that are owed to and between spouses are described in multiple areas of the Family Code.  Beyond the duty of spouses to disclose information, the spouses are also required to reasonably manage the portions of the community estate under their control. This includes disputed separate property items that could arguably be considered community property.  The size, nature and value of parts of the community property estate also directly impacts the extent that a spouse may have to disclose information.  The extent of disclosure would be less for a basic savings account with a value of a few hundred dollars in comparison to an active investment account with a multi-million dollar balance.  Another example would be a party trading in a broken down car for a new car in comparison to exchanging real property (1031 exchange).

The failure of a party to disclose a particular asset or debt may result in an incomplete final judgment.  It is recommended that both parties fully disclose their community and separate property interests to each other on the required Declarations of Disclosure. The Declarations of Disclosure are essentially an outline for the division of the assets and debts of the parties.  If a party fails to disclose an asset or debt, it is likely to not be included in a final divorce judgment.  The undisclosed asset or debt that is not address in a final judgment is considered to be unadjudicated.

The other party can then go back to court and request that particular community property asset(s) and/or debt(s) be divided.  An unadjudicated item is considered an “omitted asset” and if the court finds fraud in a party’s failure to disclose that item, the Court can award the entire value of the asset to the other party. Furthermore, the Court can award the entire value of asset to the other party at the highest value until the asset is properly adjudicated. Therefore, it is better to avoid the potential risk and disclose as much as possible in the beginning to avoid the potential problems and legal costs in the future.

 

If you have questions about the fiduciary duties during divorce, addressing the disclosure of assets and debts, or need help in a divorce proceeding, please contact our office to schedule a consultation.

Marijuana Use Can Affect Child Custody

The legalization of marijuana for recreational and/or for medical purposes is a prevailing issue.  In the context of family law, the issue of marijuana use has changed in a relative short period of time.  Ten years ago it was quite possible that a parent that used or was accused of using marijuana could have lost custody of their children and be forced to go through numerous hurdles in order to ever see their children. Nowadays, a judge is likely to view accusations of marijuana use with more skepticism.  One reason is the evolving view of marijuana use as it is becoming more accepted in society.  Another reason is that for years people would blindly accuse each other in court of drug use to the extent that judges have become immune to the mud slinging.  This still does not mean that a parent that uses marijuana will not face criticism and negative repercussions in a custody case.

In California, marijuana use is only legal for medicinal purposes. Even if a person legally uses marijuana, it will still greatly affect their custody case.  The Court will base its decisions regarding child custody on the best interest standard which concerns the health, safety, and welfare of the child.  The Court will only be interested in placing children in a situation which is in their best interest. Marijuana Use Can Affect Child Custody even though it has gained more acceptance. Still continuous and/or frequent marijuana use will still likely negatively impact a parent’s custody case.

It is recommended to consult with a experienced attorney if marijuana and/or other drug use is an issue in a child custody dispute.

Orange County Child Custody Mediation

Child custody and visitation disputes that are submitted to the court for determination are first required to go through court ordered mediation. Depending on the county, the court may automatically send the parties to mediation prior to the court hearing or the parties may first have to appear before the court to then be ordered to mediation.

The court ordered child custody mediation is mandatory and both parties are obligated to attend. Family Code section 3170(a) states, “(a) If it appears on the face of a petition, application, or other pleading to obtain or modify a temporary or permanent custody or visitation order that custody, visitation, or both are contested, the court shall set the contested issues for mediation.”

If one or both parties fail to attend the ordered mediation, the court may fine the party who failed to attend mediation and the court will likely reorder the parties to mediation. The court is not likely to proceed with a child custody/visitation hearing without the parties participating in mediation. If a party repeatedly fails to participate in mediation, the court could prohibit that party from participating in a custody/visitation hearing.

Attorneys and third parties are not permitted to attend the mediation. A limited exception to attendance is that children of the parties that are of a certain age (14) and/or maturity may be allowed to participate in the mediation and to express their wishes as to custody and visitation. The mediator that conducts the mediation is an individual employed by the court and has met the minimum requisite educational standards in the fields related to marriage, child behavior, and/or family relationships.

At mediation, the parties will generally sit and discuss together the issues of custody and visitation with the mediator. The parties will likely be kept separate when there are issues of child abuse and/or domestic violence. The mediator will prepare an agreement if the parties are able to come to a full or partial agreement on issues regarding custody and visitation. The agreement is then forwarded to the judge assigned to that case for it to be made into a court order. The issues that remain unresolved after mediation are to be litigated before the judge at a hearing.

The mediator may also make recommendations to the judge on what the mediator believes is proper custody arrangement. There are some counties including Orange County in which the mediator does not make recommendations to the judge. The mediator could also recommend that the parties attend another mediation session for multiple reasons including limited time that did not allow the parties to properly discuss the issues and/or the mediator believes the parties would benefit from another mediation session. The mediator could also recommend a child custody evaluation by a court appointed investigator pursuant to Family Code section 3110 or a court approved psychologist/expert pursuant to Evidence Code section 730 on cases where there are more serious issues involved.

If you are considering or are presently involved in a custody dispute or have an Orange County child custody mediation and need help, please contact us to schedule a consultation.

Divorce or Legal Separation – Where to start

A person may have a question as to which process is more beneficial when contemplating ending a marriage.  Most people decide between a divorce or legal separation since annulments are rare. The process for a divorce or legal separation are similar.  The issues of child custody, visitation, child support, spousal support, attorney fees and property division are addressed in both a divorce or a legal separation.

The primary difference is that at the end of a divorce both parties are returned to a single status while the parties in a legal separation remain legally married.  A party with a legal separation is unable to remarry while a party with a divorce is free to remarry.  The process of legal separation should also not be confused with the “date of separation” or the fact that a couple has “separated.”  Legal separation may be used for parties that believe that there is a chance of reconciliation (fixing their marriage).  In addition, legal separation is used in situations where one or both parties are unable to divorce for religious or personal reasons (including maintaining health insurance for a sick spouse).

Both parties in a case must request a legal separation to maintain the process.  The legal separation automatically becomes a divorce if a party files a Petition for Legal Separation and the other party then requests a divorce in their responding paperwork.  A request for legal separation may also be converted over to a divorce by amending the pleadings in the future pending that jurisdiction is satisfied.  In other words, it only takes one party to request a divorce.

A person must reside in California for 6 months and in a particular county for 3 months before they meet the jurisdictional requirements for a divorce.  A legal separation does not have the jurisdictional requirements. So there are times where a party may file for legal separation until they meet the jurisdictional requirements.  Then a party can amend the legal separation into a divorce after the party satisfies the jurisdictional requirements.

If you have questions about whether legal separation or divorce is right for you or you are ready to start the process, please contact us for a consultation.

The Importance of the Income and Expense Declaration Form

The Income and Expense Declaration (FL-150) is one of, if not the most important document during the pendency of a family law matter.   The Income and Expense Declaration is important since it is used for a variety of financial issues in a family law case.  The declaration is required by a court to determine issues such as child support, spousal support (alimony), attorney fees, and other financial related issues.  Also, the Income and Expense Declaration comprises part of the Declaration of Disclosure which is required in every divorce proceeding.  Parties can not get divorced without exchanging their Declarations of Disclosure hence a person must complete an Income and Expense Declaration.

In addition, the parties must have a current Income and Expense Declaration filed with the court before a hearing,  trial, or any other time that the court will make a determination on an issue which may require considering the parties’ finances. One common mistake is when a party believes that since they have previously filed an Income and Expense Declaration that it will still be acceptable at a later date.  Under Rules of Court §5.260(a)(3), “‘Current’ means the form has been completed within the past three months or when facts have changed. The form must be sufficiently completed to allow the court to make an order.”  This is important to consider since the period of time between appearing in court usually exceeds three months at a time.

Unfortunately, another problem is that parties rarely put the effort and time into properly preparing their Income and Expense Declaration or believe that their attorney can do it for them.  The Income and Expense Declaration is a snap shot of a person’s finances including their income and obligations. For that reason, attorneys are not able to prepare the Income and Expense Declaration without significant input from their client. A party is the most knowledgeable person regarding their own financial situation.

A poorly completed or inaccurate Income and Expense Declaration can create additional problems for a party such as being attributed too much or too little income when calculating child or spousal support.  It is important that a party fill out an Income and Expense Declaration as completely and accurately as possible.  Experienced Family Law Attorneys frequently use the Income and Expense Declaration for cross examination in court. So for that reason, it is even more important to spend the time necessary on your Income and Expense Declaration.

Advantages of filing divorce first

Does it Matter who Files for Divorce First

A common belief is that there is a significant advantage to the party who files first for divorce.  Mostly, there are no significant advantages of filing first for divorce.  The party that files first is known as the Petitioner and the other party that responds to the divorce is known as the Respondent.  At trial, the Petitioner will be first to put on their evidence and testimony and the Respondent will go second. The Petitioner then has the right to respond to Respondent’s case. The ability to put on evidence and testimony first can be viewed as a slight advantage or disadvantage depending on the preference of an attorney.

Under Family Code section 2320, the jurisdictional requirement for filing for divorce is that a party must have resided in the State of California for at least six months prior to filing and have resided for at least three months in the county prior to filing for divorce.  There are some situations where parties may live in different states and/or different counties which could be a factor in a party rushing to be first to file and serve their Petition for Dissolution.  Under some circumstances, there is an advantage to the party that files and serves first since jurisdiction would be obtained in the area where a party resides.  Where parties live in different counties or states, this could be a significant factor because a party could avoid lengthy travel to a distant court or avoid a jurisdiction that may be unfavorable on certain issues such as child custody.