Monday, August 31, 2009

Chinese Proverb

"Fu bu guo san dai" - wealth does not make it past three generations. Does anyone else feel that the current generation (our collective children) is squandering what our parents fought so hard for us to have? With many exceptions, of course, investing in hard work does not seem to be a priority for the under-forty set.

Monday, August 24, 2009

Securing Legal Fees

There is a way, when, as now the real estate market seems to be on the rise, that clients can secure their lawyers' legal fees for services rendered in family law matters (including divorce, custody, visitation, support, enforcement, collaborative law and mediation). It is called "Family Law Attorney Real Property Liens" ("FLARPLs"), which provide an alternative means for payment of fees and costs in ". . . a proceeding for dissolution of marriage, for nullity of marriage, or for legal separation of the parties." (Fam. Code §2033.) These liens originated under common law, but are now codified in Family Code sections 2033 & 2034, where the modern guidelines are set forth. These FLARPLs prevent the use of a bankruptcy petition to discharge the attorney's claim for fees and costs. Section 522 of the Bankruptcy Code permits the debtor to avoid certain liens on exempt property, such as the former marital residence. The reason for the statute is to protect the debtor’s exemptions in order to facilitate his "fresh start." Although this is indeed important, this concept only applies to "judicial liens." It is unclear whether a FLARPL is a statutory lien or a judicial lien. However, the statutory text of the Family Code and cases which are similar suggest that a FLARPL is a statutory lien that cannot be avoided, if properly perfected.

Thursday, August 20, 2009

Court Closures

Every third Wednesday of the month, the courts in southern California are, for the most part closed now, indefinitely. While this is an inconvenience and loss of income for many, many people, I believe the worst victims of this budget fiasco are the family law litigants and the probate litigants, whose lives all hang in balance and in limbo for months and years as it is, and now the delays are anticipated to be months and years longer. With those delays are the huge, sometimes unsurmountable costs of legal fees, unnecessary support payments, decrease in values of property, inability to purchase property or obtain further education or pursue careers, and much, much more. I often decry where the priorities are for my fellow Californians. My usual cause celebre is the lack of priority of education expenses. I now add the burden of the court systems. Will we all have to take to private judging to effectuate our clients' needs?

Monday, August 17, 2009

Life Insurance Plans

Even though divorce takes such a significant financial and emotional toll on the parties, their children and other family members and friends, it is often necessary for the parties to look beyond their immediate legal and financial needs in order to recognize the future needs of one or both parties, as well as any children of the marriage, in the event of an untimely death of one of the parents. In fact, even in a non-marital relationship, factors to consider relative to the future financial security of the children of such a union are just as important.
One solution for securing financial stability in the future is through life insurance. Life insurance is one way to secure payment of spousal support beyond the life of the supporting spouse. Such a policy can be owned and paid for by the supporting spouse or the supported spouse, or a combination of both. It can be court-ordered, or voluntary.

With regard to child support, a custodial parent may get an order from the court that the supporting spouse maintain a life insurance policy covering at least the amount remaining to be paid in child support up to the time that child reaches the age of majority (which in California is 18). If such a policy is not in force at the time of death of the party ordered to pay the premiums, then the intended beneficiary will have a claim against the estate.

If no such order can be had, the custodial parent or even the non-custodial parent might wish to pay for and own such a policy to cover the circumstance where the other parent dies prematurely and either the custodial parent has no ability to maintain the marital lifestyle or the non-custodial parent is suddenly unable to pay for the additional child care costs.
Transferring ownership and/or beneficiaries on an existing policy is an option if purchasing a new policy is financially out of the question. Sometimes payment of life insurance premiums are added as additional child or spousal support which gives a tax break to certain payors. It is important to include provisions in the judgment that the payee spouse receive ongoing proof of payment of the premiums and named beneficiaries.

Some pitfalls of obtaining life insurance include naming minors as beneficiaries (creating the need for the court to establish a guardianship) and/or naming a trust as beneficiary, in which case the insurance proceeds are generally withheld until the conclusion of the probate process (sometimes more than a year or two).

529 Plans

In the next few days, I will be writing little blogs about various ideas to do with college savings plans. Today, I want to discuss expanding the list of potential beneficiaries. Did you know that, due to recent tax reforms, the pool from which you can choose beneficiaries now includes cousins? That means that if you are a grandparent with multiple grandchildren, you can set up a 529 plan for your first grandchild and if that grandchild chooses to delay higher education, you can transfer the plan to another grandchild.

Sunday, August 16, 2009

Back to the Future

I had a fantastic time last night visiting with some old friends from high school and some friends I have known since fourth grade. Although we had a 40th year reunion two years ago, we all got together again at the home of a classmate's parents in Beverly Hills to renew old bonds and talk about the present and the future and learn more in depth what has kept our collective hearts beating these past 40+ years. Deaths, births, grandchildren, jobs won and lost, heartaches, happiness, sharing of favorite memories, sharing of great wine and great ideas. Introducing spouses brave enough to attend their spouse's reunion. Spouses forming reunions of their own and finding people they knew in their pre-marriage lives. No one caring what anyone is wearing, whether a few more pounds and a few less hairs adorn our souls, people who never would have a conversation with you willingly in high school genuinely interested in what you are doing, how you are feeling and eager to share the most intimate details of their lives with you. I hope sincerely that, although the group was much smaller than our 40th, we keep getting together to reenforce what is really important in life and make us smile and enjoy the present for the blessings that we all have received.

Tuesday, August 11, 2009

Spousal support may not be reduced just because the supported spouse starts to receive retirement benefits.

In the recent case of In re Marriage of Dietz, 2009 Cal. App. LEXIS 1282, the court of appeal held that that the distribution to wife of her share of husband’s retirement plans and her eligibility to begin drawing from them does not constitute a change of circumstances for support modification purposes. Please be aware of this when you consider options for settlement of spousal support during your divorce.

Monday, August 3, 2009

Well, after many phone calls, and calling in favors from friends in high places, we finally got someone from Animal Control to come by to see what to do about the doe that had been living in our backyard for the past 7 days and she was great. She helped Avery cut our chain link fence so she could pass through and threw grass all over the area so she would be interested in moving out of our yard. All day long on Saturday, she just stared at us from a corner. Finally, some time during the night she went on to find her family. Meanwhile, all my beautiful flowers have been eaten and the trees and grass on the hillside have been nicely trimmed. She was about 6 months old!

Saturday, August 1, 2009

Oh Deer!

We have been entertaining a doe in our back yard the past week. Animal control has tried & failed to get it to leave us. All my beautiful plants have been eaten and she is enjoying our pool more than we are. Poor thing is so scared!