Articles Posted in Settlement

The Valuation Dilemma

The most contentious business issue in many divorce proceedings is the value of the business that must be divided as part of the divorce settlement. Valuation is an inexact science, and the divorcing couple can easily spend hundreds of thousands of dollars on expert and legal fees battling it out over the value of one or more private companies included in the marital estate. This challenging issue is not subject to any easy fix. But there are some options the couple may want to consider before engaging in an expensive and time-consuming valuation battle.

Marital settlement agreements are common documents used to mitigate problems with divorce litigation.  While a pre-nup is more common, couples can also agree to enter into a post-nup that details a property division and removes any conflict regarding the valuation of specific assets. Texas statutes set forth strict requirements to follow for marital agreements be enforceable.

british-pound-300x200The British divorce court sided with a English lady who was a stock market whiz person who made $13 million dollars during her marriage.  Originally the Divorce Court had sided with the ex spouse husband and gave him a cut of all her stock earnings thus making him quite wealthy upon a short term marriage. Julie Sharp a stock trader by profession in England reduced significantly her husbands share to only $2 million dollars rather than the traditional split down the middle. Why did the family law court in England do so? Well the time honored scenario of the equal split down the middle for spouses did not seem to sit well with them. In California family law Court Spousal support is used to determine the standard of living scenario to make the ex spouses live according to the standard they had while married.  This situation usually has more impact upon lengthy marriages.  In California a long term marriage would be considered 10 years or more.

Mrs. Sharp was an energy trade on the British stock exchange.  In 2015 the British family law Court made a ruling giving her ex 2.74 million pounds.  Later the London appeals Court lowered it to 2 million pounds. The London appeals court has been on a recent trend of not equally splitting the assets as it had done in the past to achieve a fair and equitable distribution of a divorced couples assets. Now they have changed and seem to be permitting the ex spouse whom may be the bread winner to keep more of their earnings and shortchanging the less wealthy ex spouse with less money.  Thus it appears the London appellate court is deviating from fairness to a more of who makes more money prevails attitude.

They further state that nonworking spouses will be awarded “special contributions” for their time in the marriage. What exactly is a special contribution is uncertain.  It seems to be a new trend that certainly favors the spouse who makes more money and takes away from the spouse who does not work. The idea that there is a financial partnership among married people is starting to be thing of the past and is a disturbing trend on the idea of marriage in the United Kingdom.  The benefits of marriage seem to be seem to be on the downside in British culture.  Nothing like this has arrived in California or United States just yet.  However, if ever this type of ruling did appear I assume it will be fought with great zeal in the Family Law Court system.

It looks like divorce does a single lady good! Camille Grammer will reportedly be awarded $30 million from the community estate she shared with Kelsey Grammer. Their estate is reportedly worth $60 million after liquidation of their assets (3 homes are currently on the market awaiting to get sold).

From an Orange County divorce lawyer’s perspective, because California is dictated by community property law, all assets acquired by the parties during marriage are community property unless a prenuptial or postnuptial agreement states otherwise. When Camille met Kelsey, Kelsey was apparently broke despite his earnings received from “Cheers” and “Frasier”. It is been said that Camille helped orchestrate the millions their estate is worth.

At any rate, luckily these two were able to settle their property issues and can move on.

An excellent article published earlier this month by Fox Business News outlines some of the pitfalls that dissolving a marriage holds for one’s credit rating. The article makes several points that anyone contemplating an Orange County divorce would be well-advised to keep in mind.

First and foremost – and, it must also be said, unfortunately – it pays to be a bit wary of your soon-to-be-ex while going through the divorce process. “People do unpredictable things during emotional times,” the article notes, citing a credit counselor. It goes on to describe a woman whose husband apparently ruined her credit on purpose by failing to honor a number of bills he had promised to pay.

From the perspective of an Orange County family law attorney, this is a reminder of why care and caution are always important. If a couple holds joint credit cards or other accounts it is critical that there be a written understanding of who will become responsible for what, and equally critical that each party prove to the other that its joint credit obligations have been met. Changing the names on everything from utility bills to in-store loyalty cards can be a surprisingly lengthy and frustrating process. The sooner it begins – and the more carefully each party monitors it – the smoother it is likely to be.

After more than two years of sometimes bitter negotiations, Mel Gibson and his wife, Robin Moore, have reached “a full agreement including dividing their property” in a comprehensive California settlement agreement, according to the celebrity-tracking website Showbiz Spy.

Because Gibson and Moore were together for nearly 29 years – from 1980 to 2009 – pretty much everything Gibson has earned over his long film career is subject to California’s community property laws, especially since it has been widely reported that the couple signed no prenuptial agreement. By some estimates Gibson’s wealth approaches $900 million, the website reports.

In addition to financial issues, the couple have also tangled over custody of their seven children, as I noted in a post last year. Gibson also has a two-year old child with his now-estranged ex-girlfriend Oksana Grigorieva, with whom he is also engaged in California family law litigation. Though few details of the Gibson-Moore agreement have made it into the public realm, Showbiz Spy reports the agreement is expected to achieve final approval from the Southern California divorce court judge hearing the couple’s case sometime next month.

There is a fair amount of anecdotal evidence that the difficult economy of the last few years has led to a rise in requests for post-settlement modifications in Orange County, elsewhere in California and nationwide. Last week the New York Times ran a modification story with a twist: it is linked to the Bernie Madoff scandal.

Bernard Madoff’s historically huge ponzi scheme has, of course, left an extraordinary number of high-profile victims in its wake, from Hollywood stars to local charities and the New York Mets. The sheer size and duration of his fraud has guaranteed that it will make its way back into the news again and again for many years to come.

According to the Times, the basics of the Madoff-prompted modification case are these: when Steven Simpkin and his wife Laura Blank divorced in 2006 “they agreed to split their considerable wealth equally.” In dividing up their assets, valuing cash versus real property, Simpkin kept, among other things, the couple’s account with Madoff (this may partly have been a matter of convenience as, the paper notes, it was held in his name). After Madoff’s fraud was exposed – and accounts held with him became worthless – in late 2008 Simpkin filed suit demanding that his ex-wife “turn over millions of dollars that she had received in their settlement to make up for the substantial losses he had sustained in the fraud.” Needless to say, Blank sees the situation differently, and the Times reports that the case is attracting considerable attention nationwide. As the paper notes, the court ruling will only, strictly speaking, impact New York’s divorce laws, “but a decision by the influential (NY Court of Appeals) could influence how judges interpret laws in other states.

A court’s ruling in a Southern California divorce case from San Diego, along with a bill making its way through the legislature in far-away Oklahoma, are bringing new attention to military retirement pay and how it is treated in divorce cases here in Orange County and elsewhere around the country.

According to a press release republished by PR Log, the San Diego case turned on the proper implementation of a 1997 California divorce settlement of a couple in which the husband was in the military. After the ex-husband retired in 2007, the ex-wife alleged, he failed to uphold their agreement.

The California case focused on what were essentially technicalities regarding the drafting and implementation of the original agreement and the wife’s contention that these led to her being denied the full portion of her husband’s military retirement pay to which she was entitled. If proposed legislation in Oklahoma passes, however, that share could shrink for spouses in future cases – a prospect that has other legislatures paying close attention and has sparked warnings that Oklahoma might become a haven for armed forces members seeking to dissolve their marriages.

Even as he embarked on one of the stranger high-profile celebrity media blitzes in recent memory Charlie Sheen, it now seems, was moving forward with a far more conventional Southern California child custody agreement with his third ex-wife, Brooke Mueller.

My colleague Winiviere Sy noted in a February blog post, the Sheen-Mueller divorce was finalized earlier this year. As we have discussed in this space on several previous occasions, however, the formal dissolution of a marriage does not necessarily mean that all outstanding financial and custody issues have been resolved. California law allows judges to end a marriage even as negotiations over a final settlement continue.

According to a recent article in The Hollywood Reporter, the couple’s Los Angeles child custody issues have now been wrapped-up. The paper quotes a statement issued by attorneys for both Sheen and Mueller saying the pair have “reached an agreement that resolves their differences.” No details of the agreement were released, but its existence moots a court hearing that was scheduled to take place tomorrow. That hearing was originally triggered a week earlier when Mueller obtained a restraining order against the actor after a trip she made with him and two other women to the Bahamas ended badly.

With tax time fast approaching this is a good moment to examine some of the ways in which an Orange County divorce can affect one’s tax status. A fascinating article posted yesterday on the financial website examines the consequences of an obscure IRS provision known as the “Innocent Spouse Rule,” touching on its particular role in divorce cases.

Briefly stated, the innocent spouse rule allows one spouse to avoid tax penalties related to a joint return if he or she can plausibly claim to have had no knowledge of what the other was doing in filling it out. As the article at makes clear, the term “spouse” can be slightly misleading, since the rule can also apply to divorced couples. That, of course, is good news. One of the sad realities of divorce, be it in Orange county, Los Angeles, San Bernardino or elsewhere, is that dissolving a couple’s financial links can sometimes be a more complex process than dissolving the marriage itself.

Smartmoney, for example, cites a case from the 90s in which a woman “was denied an appeal after the IRS wouldn’t let her claim the innocent spouse rule over a return prepared by her ex-husband.” The point here being that tax obligations incurred during the marriage followed the woman even after her divorce. Smartmoney notes that the law was changed in 2004 to make innocent spouse claims easier to file. That, however, has led to a huge spike in the number of claims made under the law and has led the government, in turn, to view such claims with increasing skepticism.

An essay on the subject of pets and divorce published earlier this month at The Huffington Post has been blogged and commented-upon widely over the last ten days or so. The article, by Jill Brooke (an author who describes herself as a “Blended Families Expert”), looks at the increasing prevalence of pet-related issues in divorce cases.

“According to the American Academy of Matrimonial Lawyers, attorneys have seen a 23 percent jump in pet custody cases,” Brooke writes. A similar analysis at the pet-focused website Paw Nation notes that “today half of the 190 accredited law schools in the United States, including Harvard and Yale, offer courses in animal law” – a field that barely existed as recently as a decade ago.

Brooke presents a long string of anecdotes outlining the strife that pet custody can cause in a divorce proceeding. She writes that “dogs used to be viewed as property… But now courts realize that pets are members of the family and their best interests are being considered.” That, however, is not an entirely accurate reading of the law, at least here in Orange County and elsewhere in California.

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