Litigation

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The Secret Tool to Uncover Hidden Assets

Fairly dividing assets in a divorce is a tricky and sensitive topic for both parties, but it is an essential part of the divorce. When kids are involved, it’s only more important to ensure assets are fairly divided. 

While it can already be a challenge, splitting community property only becomes more complicated when the community and separate assets are mixed. Tracing, or tracking back the origin and development of assets, is essential for uncovering assets in a divorce and ensuring the property is divided equally. 

Community vs Separate Property 

Property must be characterized in a divorce. Community property includes the accumulations, earnings, and assets of either spouse from the date of marriage to the date of separation. Separate property is the property that either party had prior to marriage or after separation. In a divorce, community property is to be equally divided among each party, and the two parties typically take their separate property. 

However, this is not always straightforward. Many parties mix community and separate assets during the marriage. 

What is Tracing?

As the name suggests, tracing is a method used to uncover assets. It involves searching back through various transactions to identify the development of assets and liabilities. This method is used to determine when an asset was acquired and how it may have combined with community assets during a marriage. 

Tracing can be used to determine separate properties, and it can also be used to uncover undisclosed assets. 

Uncovering international assets is a common challenge that people face, as they can e hard to find when your spouse does not disclose them. However, experienced professionals can often uncover international assets with advanced tracing. A professional can request relevant documents for business, bank account, and offshore assets. 

Asset Disclosure 

Tracing may also be used if one party believes that their spouse is not forthcoming with their assets. In this case, you should get a court order for asset disclosure. The court order will require the spouse to disclose all relevant financial documents and information. Should the spouse fail to disclose assets, they can be charged with contempt of court. 

Uncovering Assets is Complicated

Property division during divorce can be tough, especially when uncovered assets are in question. Seeking the expertise of a divorce attorney can offer you professional guidance to ensure you get the assets you are entitled to. Contact Miod today for more information and to schedule an appointment. 

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Calculating the California Cannabis Cultivation Tax

Most parents want to go above and beyond to care for their children. This is true whether Mom and Dad stay together or go their separate ways. That said, determining child support can feel like a daunting process, at least on the surface. 

Each state has its own regulations for calculating child support. In California, determining child support requires a complex calculation. This calculation is used to determine the financial support of a minor child, usually due to divorce or separation.

We’ll explain the basics of the California child support guidelines and how child support is calculated. 

California Child Support Guidelines 

The guidelines for child support in California are designed to offer one uniform calculation for determining how much of a parent’s income should go toward meeting a child’s basic needs. These guidelines are found under California Family Code, §§ 4050 to 4076 and take the following ideas into account:

  • The parents’ job is to care for their children, providing adequate food, shelter, and other resources to promote a reasonable quality of life. What a parent provides will depend on the parent’s financial situation.
  • Exceptions to the guideline are only used in special cases. 
  • Child support orders should be made to sufficiently provide for a child while also taking into account California’s high cost of living.
  • Both parents are responsible for supporting their children. 

Components Used to Calculate Child Support 

Child support takes into account many different factors, including: 

  • The gross income of each parent. A judge will look most closely at the net monthly disposable income of each parent. 
  • The percentage of time each parent spends with each child. 
  • Tax deductions the parents can claim. 
  • Child care costs either parent faces. 
  • Mandatory payroll deductions. 

The formula for calculating child support in California is:

CS= K (HN-H%)(TN)

  • CS= child support amount. This is the answer the calculation will give when you enter your information. 
  • K= The total allocation for child support of both parents’ income. 
  • HN= High net. This is the net monthly disposable income of the parent who earns more money. 
  • H%= The percentage of time the higher-earning parent has primary physical responsibility of the child. 
  • TN= Combined total net monthly disposable income of both parents. 

Exceptions to the Guideline Amount 

In most cases, the court will use the formula above to determine child support amounts in California. However, exceptions do exist. Family Code Section 4057(b) has the full list of factors that will allow deviations from the guideline. 

Consider this example. One parent may have a very high income. If the amount determined by the formula exceeds the need of the children, the judge may choose to award child support that’s lower than the formula. 

The calculation from the guideline above is used in California to determine child support. Ultimately, the formula considers the parents’ incomes, tax deductions for each parent, time spent with the child, and more to determine a fair child support amount. 

Need more guidance with matters concerning child support? 

We are happy to help!

by Miod and Company Miod and Company No Comments

Understanding the Hardship Deduction: What You Need to Know

Most parents will do anything they can to provide for their children. Many will even forgo their own wants and needs to ensure that their kids can eat well and live comfortably. That said, sometimes money gets tight. Maybe one of the kids recently underwent expensive surgery and the family is now drowning in medical bills. Maybe hours have been cut at work, and it’s just become incredibly difficult to keep up with California’s sky-high cost of living.

Depending on the nature of your hardship and your financial situation, you may qualify for the hardship deduction. As is laid out in California Family Code section 4059(e), hardships may be granted to a parent who can demonstrate a tangible financial need. The hardship deduction essentially reduces the amount of money a parent owes in child support

In this article, we will explore in greater detail what the hardship deduction entails and what exactly qualifies as a hardship.

What Qualifies as a Hardship?

The Code identifies several very specific cases in which a parent may qualify for the hardship deduction. It’s also worth noting that facing one of these hardships does not automatically qualify one for the deduction. Any party seeking a deduction must show evidence of need in court.

Qualifying hardships are:

  1. Extreme financial burden from health expenses. It doesn’t take much to start an unmanageable pile of medical bills. Just one severe illness or injury will do it. That said, a parent seeking the hardship deduction for significant health expenses must demonstrate not only the extent of the healthcare expenses but also that they are responsible for paying for such expenses.
  2. Living expenses accrued by the parent and the family with whom they presently reside. Living in California is quite costly, especially when you have to take into account the needs of two different families. A court may grant a hardship deduction if the parent can produce evidence of steep living expenses for the “natural or adopted children” for whom they are financially responsible and who presently live with them.

 

What Factors Will Be Taken into Account When Calculating Hardship?

The judge may take several factors into account when calculating hardship. These factors typically include:

  • The incomes of both parents. The judge will likely first examine the financial well-beings of both parents to get a clear picture of what needs must be met. The judge may start by looking at the total gross incomes of each party (that is, what they make before any taxes or deductions have been accounted for). Beyond that, the judge may also consider the requesting parent’s net disposable income after deductions have been factored into the equation.
  • The number of children. It only makes sense to take into account the number of children for whom a parent is responsible when making such a decision. The judge will likely consider children presently living with the payor (biological and adopted) and children living with the other parent for whom the payor is financially responsible.
  • Tax obligations. The judge will also consider the payor’s tax liability (before any deductions are applied) and how these tax obligations affect net income.

The Hardship Deduction: A Complicated Code That’s There to Help

At the end of the day, caring for children is an immense responsibility, whether those children live under your roof or not. The hardship deduction is in place to ensure that a parent’s financial needs are taken into account when calculating child support, while also ensuring that the parent pays what they are legally deemed to be capable of paying to promote the well-being of the children.

Have any questions about the hardship deduction? We are ready to answer!

Reach out to the experts at Miod today!

by Miod and Company Miod and Company No Comments

Rehabilitative Alimony vs Limited Duration Alimony: What’s the Difference?

Alimony, also known as spousal support, refers to a designated payment that one spouse must pay to the other while they are going through divorce proceedings or once their divorce has been finalized.

The amount of money that a party is required to pay is determined by the amount the spouse receiving payment needs in order to maintain their standard of living and the amount the other party is financially able to give.

There are a few different types of alimony that parties may pay after their divorce is finalized: permanent alimony, rehabilitative alimony, limited duration alimony, pendente lite alimony, and reimbursement alimony.

Oftentimes, it is easy for people to confuse rehabilitative alimony and limited duration alimony, because these payments are only required for a specific period of time.

Here are the key differences between these two types of alimony:

Rehabilitative Alimony

Rehabilitative alimony is a spousal payment that must be paid for a specific duration of time, after which the spouse receiving alimony can be reasonably expected to no longer need this support. 

A judge might require this type of alimony for a couple of reasons:

  • The party receiving alimony already has the job experience or education necessary to maintain their current standard of living after the duration of the rehabilitative period and needs time to find a job
  • The party receiving alimony plans to become self-supporting by the end of the rehabilitative period and needs time to complete training or an education program in order to find a job

For example, a spouse with a college education who becomes a stay-at-home parent after being a part of the workforce for several years may receive rehabilitative alimony for a few months while hunting for jobs.

When the judge awards this rehabilitative alimony, parties must provide a plan detailing the rehabilitative time frame and the steps that the receiving party will take in order to return to the workforce or become self-supporting during this time period.

Limited duration alimony

Like rehabilitative alimony, limited duration alimony is only required for a specific period of time. However, this type of alimony depends less on the receiving party to complete certain steps to re-enter the workforce and more on the conditions surrounding the marriage and the receiving party’s standard of living.

Judges typically award limited duration alimony when the parties involved were only married for a short period of time, so it is unwarranted for one spouse to pay alimony permanently.

This type of alimony typically must be paid for a duration established by a judge until the person receiving alimony remarries. If the receiving party significantly improves their earning capacity to the point where it would not be appropriate for them to receive alimony, the original payment amount for this arrangement might be modified by a judge.

Regardless of whether a party receives rehabilitative alimony or limited duration alimony, there is always a set period of time during which the receiving party has time to become self-sufficient.

by Miod and Company Miod and Company No Comments

How Financial Experts Help With Family Law Cases

In the event of a divorce, both parties will be impacted financially by the results of their cases. Financial experts can help make sure that each party has a favorable financial outcome during property division, alimony establishment, and any other stage of the divorce process that involves the finances of the involved parties.

Here are five ways that financial experts can help with family law cases:

1. Identifying assets

Financial experts are able to use their expertise and resources to determine whether or no particular assets should be considered marital or nonmarital assets.

This will help ensure that parties are not forced to divide and lose money on assets that are nonmarital.

2. Determining alimony and child support

While ultimately a judge will create any alimony or child support orders, financial experts can assist by determining the true income of both parties. Sometimes calculating income requires more than just tax returns or financial statements. 

Financial experts can gather the information necessary to calculate each party’s income and each party’s current standard of living so that a fair spousal or child support order can be established.

3. Valuing and dividing property and assets

There are some marital assets that are challenging to value and divide, like pensions and retirement or business goodwill.

In a divorce, involved parties are not always able to value and divide businesses as if the business is already dissolved or to determine how pensions should be calculated into future alimony payments. It can be complicated for people to make sure that the existing and future income from businesses is calculated correctly so that there is a fair division of assets and no double-dipping on either party’s end.

4. Assisting with trial

Financial matters within a divorce can be complicated. If a judge or members of a jury are not able to fully understand the financial information they are presented with while in court, it might not bode well for both parties in a divorce.  Financial experts can help structure and explain this financial information and any finance-related exhibits in a way that makes it clear for the attorneys, jury members, and the judge presiding over a family law case. They can also use their expertise to help attornies develop depositions and useful cross-examination questions when challenging their opponent’s financial expert.

5. Handling taxes

Financial experts like CPAs who are well versed in property tax laws can help make sure both parties are able to divide assets according to their best interests come tax season. These individuals can make sure that their party avoids tax-traps and negative tax-related consequences during property division.

If you need help with a family law case, do not underestimate just how valuable a financial expert can be for your case. From offering advice about retirement plans and taxes to helping determine fair alimony and child support payments, a financial expert can make a world of difference when it comes to the financial impact of your divorce.

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