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How Does Contract Law Affect Your Family Law Case?

People sign contracts on a daily basis for purchases, partnerships, and more. Disputes over contracts are often complicated and stressful, but they can be even more volatile when they are about daily issues. 

Today, we’ll explain more about contracts in family law cases. 

What is a Family Law Contract?

There are different types of family law contracts, but one of the most known is the prenuptial agreement. Prenuptial agreements can be signed prior to marriage to identify the division of assets and liabilities in the future. Prenups are legally binding agreements that both parties agree to.

There are also parenting agreements and property settlements. The property settlements deal with the division of marital property, much like a prenup. Parenting agreements are about child custody and child support. 

While there are different types of family law contracts, the important part is to understand the terms of a specific contract before entering into it. 

Binding Contracts 

Courts only enforce valid contracts, otherwise known as “binding contracts.” Here are the qualifications of a valid family law contract:

  • Both parties accept a set of terms. 
  • There is a mutual understanding of what the specific terms mean when the contract is formed. 
  • Both parties must be physically and mentally capable to enter the contract. 
  • The goal and terms of the contract must be legal. 

Family law also requires that contracts are willingly signed by the parties. One party cannot pressure or force the other to sign the contract. 

Family Law Contract Enforcement

There are different ways a family law contract can be enforced. 

For example, if you have a divorce order that includes a family law contract, then the contract is a binding court order. If one party breaches the incorporated agreement, they may be found in contempt of the court. The motion for contempt is ten filed in the existing divorce case. Incorporating the agreement ensures its enforcement, but it can also lead to the courts altering the terms of the contract. 

Contracts that are not incorporated into the divorce order (i.e. prenups) are treated like non-family law contracts. If one party breaches the contract, the other party can sue for breach of contract. The breach of contract is treated as a new case, separate from a divorce. Typically, you have up to three years after the breach to sue. 

Working with a professional is the best way to draft a new family law contract or to pursue an existing contract. A family law attorney can best help you assess your personal situation.

by Miod and Company Miod and Company No Comments

This One Simple Tip Can Save You Hours On Tax Filing

Filing taxes can be a headache. You must sort through several documents, records, and more to prepare your tax return. Waiting until tax time commonly leads to missed deductions and credits that would have meant more money in your pocket. There is one simple trick that many people do not realize will save them time and money on taxes: recordkeeping.

Recordkeeping throughout the year ensures you don’t miss deductions and can file your taxes quickly. 

Keep Records for Taxes

Keeping records makes taxes much faster and easier to handle. You can keep records as physical or electronic copies. With records, you can be sure to take advantage of every deduction or tax credit that you are eligible for. You’ll be able to clearly back up every claim on your return and obtain all of the full tax benefits all while filing faster. 

Which Records Should You Keep?

Here are examples of the records you should keep:

  • Proof as payment (W-2 and 1099 forms)
  • Bank statements 
  • Invoices
  • Receipts
  • Sales slips
  • Written documentation for what you paid for (charitable contributions, mortgage interest, real estate taxes)
  • Stocks, bonds, and mutual funds dividends 
  • Pay stubs for deductible expenses 
  • Insurance records 
  • Credit card receipts 

Organizing Records 

Records are only valuable if they are well-organized and easy to access. To ensure you can make the most of your records, you should organize them clearly. Here are some tips for organizing records:

  • Use folders (physical or digital) for different categories 
  • Immediately place new documents in their correct place 
  • Create new folders for each year. For example, create a 2021 folder and then separate subfolders within the 2021 folder for each category. 
  • scan / photograph documents for digital storage 
  • Add notes to your receipts, especially for job-related expenses. The receipt must include the amount, location, date, and type of expense. Note these details on the expense if they are not printed on there. 

How Long to Keep Records 

There are some situations where you may need to keep them for longer, but generally, you should keep your federal tax records for at least three years after filing. To keep your space or computer less cluttered, you could always move the folders for previous years onto an external hard drive or cloud storage system after you file. 

Keeping records is the easiest way to save time and money when filing taxes. Everyone should keep a record, but it’s especially important for those who itemize deductions and/or write off job-related expenses.

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Community Property in California

Although marriage can bring lots of happiness into one’s life, there are cases when the opposite is true, and divorce is the only option. When people separate, their property must be split up. In some states, property is divided in a way that the judge deems fair, and the results don’t have to be an even 50-50 split. However, California is a community property state. Although this entails a tedious process, it’s a fair way of distributing belongings. 

And guess what? Miod and Company will be there every step of the way. Here is what you should know: 

What is Community Property?

 Any property that is accumulated during marriage belongs to both spouses. This includes purchases that they both benefit from, take-home pay, and even personal items bought with their own earnings. If the items are purchased while the couple is married, they both have a right to ownership. There are a few exceptions to this rule, which include inheritance and gifts. However, if it’s impossible to trace back ownership of the assets, they will be considered community property. If the couple decides to divorce, their marital assets, as well as debts, will be split equally during the property division process. 

Examples of Community Property and Division 

A couple is married for five years. They have a house in both of their names, and it has a net equity of 400k. The husband wants to keep it. They also have two cars. The car in the wife’s name is 2k in debt. The husband has a bank account with 50k. However, he opened the account a year before he got married and it’s been accumulating ever since. Finally, the wife was given a dog named Toby by her husband.

Now let’s split it up. Each spouse is entitled 200k from the house. If the husband keeps it, he must find a way to pay the wife her portion. Each party has 1k of debt for the car in the wife’s name. As for the bank account, 10k is solely the husband’s money because he had the account for a year prior to marriage. The rest of it, 40k, is split evenly between them. The wife keeps Toby since it was a gift to her. 

Where Do I Go From Here?

If you’re divorcing your partner, Miod and Company will advise you through it. We will help you divide your community property equally, to ensure a cordial split with your partner. 

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What is Considered Separate Property in California?

 

When determining the terms of a divorce, courts must rule on the division of property between spouses. This is often a challenging experience for both parties, but the state of California has guidelines in place designed to make this process streamlined. California is a community property state, which means that shared property is meant to be distributed evenly between spouses. Community property includes, but is not necessarily limited to, such assets as:

  • All earnings, income, and profits of either spouse acquired during the marriage
  • All property acquired using those earnings
  • Debts accumulated by either spouse during marriage

There is also such a thing as quasi-community property. This refers to any property which is acquired outside of the state of California and its community property laws, but that would qualify as community property if it had been obtained within the state of California.

For instance, if a spouse purchases real estate in the state of Texas, using income earned during the marriage, that asset would be considered quasi-community property. When introduced to the California legal system during the proceedings of a divorce, this quasi-community property will be considered community property and will be distributed evenly.

However, some property is not considered shared between spouses. This is known as separate property and includes such assets as:

  • All property owned by parties prior to marriage.
  • All property acquired by parties after marriage by gift, bequest, devise, or descent
  • Any assets derived by these properties, such as collected rent or profits
  • The earnings of a spouse which have been collected after separation from the other spouse

Separate property is free from the burden of even distribution and does not need to be split 50/50 between divorcing spouses. If separate property is used by a spouse in the service of acquiring community property, that spouse is entitled to reimbursement for those spent separate assets.

If spouses agree that certain assets should not be considered community property, they can present a written declaration that unambiguously clarifies this agreement. This is known as the transmutation of property and can be used to ensure that both spouses’ shared wishes are realized by the court.

In its simplest terms, community property is any property acquired during a marriage. This property will be split evenly between spouses during a divorce. Separate property is property acquired before or after a marriage that does not need to be evenly distributed between divorcing spouses.

Need help navigating the more daunting processes during divorce? We can help! Reach out today.

by Miod and Company Miod and Company No Comments

How Do Prenups Work in California?

“Prenups” are prenuptial agreements that two parties sign prior to entering into marriage. A prenup is a legal contract that details the division of a couple’s assets and debts if a divorce takes place. 

While many people are familiar with prenups in the context of one spouse having much more money than the other, prenups can be used for couples of all financial standings. 

However, for a prenup to be legally valid in California, it must adhere to certain laws. In this article, we will cover those laws in more detail. 

California’s Premarital Agreement Law

California’s Uniform Premarital Agreement Act (UPAA) outlines the requirements for prenuptial agreements. The law states that a premarital agreement is a contract between two prospective spouses, and it is not valid until marriage. 

Prenups can outline properties such as income, earnings, financial interests, debts, and present or future assets. 

According to UPAA, a valid prenup must meet the following requirements:

  • Lawful terms
  • Signed by both parties
  • Voluntarily signed
  • Is a written contract 
  • Provides at least seven days to seek independent legal counsel prior to signing

For a prenuptial agreement to hold up in law, it must meet the requirements above. To ensure you create a valid prenuptial contract, it’s wise to consult an experienced attorney. 

What Can a Prenup Include?

Prenups can address marital property. This means they can outline the rights to buy or sell property, the division of property upon death or divorce, ownership rights to death benefits from insurance policies, and a will or trust. 

However, prenups cannot contain information about child custody or child support. Therefore, prenups do not protect a parent from paying child support. The court will use California law to determine the child support in a divorce. 

They also cannot require one spouse to commit illegal acts or non-financial requirements. The prenup will not define terms regarding the relationship. 

What Invalidates a Prenup?

If the prenup does not adhere to California’s prenuptial agreement requirements, it may not hold up in the court of law. The following can invalidate a prenup:

  • Verbal agreement with no written contract
  • Involuntary signing, forcing one spouse to sign the prenup
  • Including unfair terms in the agreement 

Furthermore, it is possible to change the prenup after the wedding. Both spouses must agree with the changes and take the necessary steps to change the original draft. Working with an attorney will help ensure any new arrangements are legal. Couples that are already married may create a postnuptial agreement, and both a legally valid prenup or postnup can help to simplify a divorce in the event one takes place. 

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