Category Archives: Divorce

What is a CSRS Order and What Can it Accomplish

7477317_sFor employees of the federal government, there are 2 different benefit systems in which the employees may accrue their retirement benefits.  Civil servants maintain their funds in the Civil Service Retirement System (CSRS), and other federal employees are in the Federal Employee Retirement System (FERS). Just as qualified domestic relations orders (QDROs) govern division of ERISA controlled benefits for an employee who works for a private company, each of these two federal systems has orders that can achieve some of the same purposes.

 

In the event that members of either system divorce, get a legal separation or wish to plan for some other form of domestic relations contingency, a legal instrument known as a CSRS orders can achieve the following:

 

  • Divide a CSRs annuity
  • Divide a refund of a CSRS employee retirement contribution
  • Provide a survivor annuity benefit upon death of an employee or retiree
  • Allow for a former spouse to continue health care coverage under the Federal Employees Health Benefit Program (FEHBP)
  • Require a former spouse to cover his children under the FEHBP
  • Ensure that a former spouse assigns his or her Federal Employee Group Life Insurance Coverage (FEGLI) to a former spouse or child
  • Require a former spouse to name his child or children as beneficiaries under coverage provide by FEGLI

 

It should be noted that such benefits can be garnished for purposes of paying child support, alimony or for damages related to child abuse.  This may distinguish these benefits from those of other types of retirement accounts.

 

The Wilson Law Firm, a Professional Corporation, at 1120 Iron Point Rd Suite 100, Folsom, CA 95630 represents parties involved in domestic relations disputes.  Call The Wilson Law Firm, a Professional Corporation at the firm’s office at: 916-608-8891 to set up an appointment to speak with Attorney Dennis Wilson or visit its website at http://wilsonlawfirmca.com /.

Supreme Court Rules in Frankie Valli Divorce

divorce lawyer SacramentoThe California Supreme Court has ruled in the Frankie Valli divorce case. Valli, a popular singer in the 1960s, and his wife Randy have been battling it out over the assets from their marriage for more than a decade.

 

The court unanimously ruled that a $3.75 million insurance policy, purchased with funds from a joint bank account, was community property.

 

Randy and Frankie Valli were divorced in 2004, after more than 20 years of marriage.  Frankie purchased the life insurance policy in Randy’s name, after he experienced heart problems.  During the divorce, Frankie claimed he was entitled to half of the insurance policy, while Randy argued that because it was in her name, it belonged to her exclusively.  The Los Angeles Superior Court agreed with Frankie, but on appeal, the court ruled that the entirety of the policy belonged to Randy.  The California Superior Court overruled that appellate court decision, finding that the insurance policy was, in fact, community property, and that both spouses were entitled to half.   The court clarified that where one spouse wants to relinquish assets to the other, it can only do so in writing, and that merely listing one spouse’s name on the asset is insufficient.

 

The ruling strengthens California’s community property laws, which gives both spouses equal ownership of all assets acquired during the marriage.  The state’s highest court overturned various lower court decisions that allowed divorcing husbands and wives to claim ownership of any assets acquired in one spouse’s name.  The state’s high court made it clear that, in California, anything purchased from a joint bank account during the term of the marriage, regardless of which spouse’s name is on the asset, is community property unless one spouse indicates, in writing, that he or she relinquishes the asset.

 

[Writer: please note that the real issue was whether a term life insurance policy is community property.  Historically term policies were treated as separate property because the policy would terminate unless a premium payment was made, and those premium payments were made after separation from one party’s post-separation separate income.  The Vali court discussed the circumstances in which there is a community interest to be valued, and that discussion is the major contribution to community property law.  The article should deal with that issue.

 

If you are considering a divorce, or have questions about marital assets, you need a tough, smart attorney on your side.  Dennis M. Wilson has been representing California families and individuals throughout the Sacramento area for more than 40 years in family law, litigation, and personal injury matters.  He is certified by the California State Bar as a Family Law Specialist, and has expertise in divorce and  dissolution of civil unions. Visit the Wilson Law Firm online or call us at (916) 608-8891 for a free consultation today.

Treatment of Term Life Insurance Policies in California Divorce Cases

business attorney Folsom CaliforniaAs a community property state, California treats property obtained during marriage to be the community property of both spouses. This applies to life insurance policies.  For an investment life insurance policy, which accrues value as premiums are paid on the policy, California law utilizes an apportionment policy in the event the spouses get divorced. Generally speaking, the courts look to what percentage of the premiums were paid by a policyholder prior to the marriage and how much was paid during the marriage. Then, if the policy is cashed in for surrender value after the divorce or benefits are paid because the insured dies, a court determines which portion constitutes separate property and community property respectively. (The community property is then divided between the two parties equally.)

 

Disposition of term life insurance policy benefits pose a dilemma for the courts, however. While an insured may make payments on these policies regularly over a period of time, only the last payment made secures the coverage for the benefits to be paid upon the death of the insured. The policy does not accrue value during the course of this period. (Like a lease for an apartment, a tenant may make payments for several months to live there but only the last payment secures the right to live there for the current month.) For purposes of divorce, the courts in California issued divergent opinions on how to characterize and evaluate such policies.  For several years the courts relied on the same apportionment approach applied in the context of investment policies. Then, in the Estate of Logan case, another appellate court held that whether the proceeds from a policy are community or separate property is determined by whether the last premium payment was made before, during or after the marriage. (The issue of who is listed as the policy’s beneficiary is a separate but obviously related, issue.)

 

Because of the split between the appellate courts on this issue, uncertainty persisted about which approach California courts should follow in divorce cases where a term life insurance policy was held by a spouse. Recently, the Court of Appeals for the Fifth District in California sought to settle this issue in the case of In re Marriage of Becky and Gary Burwell.  To the extent that the last payment on the policy is paid solely with separate funds, for instance after the divorce, the proceeds of the policy after the insured’s death, go strictly to the estate of the deceased or, if applicable, a new designated beneficiary. In this limited regard, it agrees with the Logan court. But it considers other factors as well. A person may become uninsurable if their health declines. But if the insured has a policy with a right to renew, the insured can maintain the term policy. Hence, any premium payments that enabled that right do provide a value to the insured. The Logan rule ignores this factor. Also some policies may have a cap on premiums. The insured derives a benefit from this as well. If the insured had to obtain a new policy every year, the premium the insured would have to pay may rise as his or her medical condition deteriorates. The insured, in essence, secures a discount because of prior payments which may have been made by the community. Accordingly, as the insured becomes less insurable, the “the final premium obligation is met by the joint effect of (1) the funds expended by the separate estate to pay the premium and (2) the “discount” embodied in the premium cap, which is a partial-community asset.” So the court in Burwell finds that the community should receive a fraction of the proceeds based on these two factors.  It devised the following formula to account for these: (percentage of total premiums paid by community) × (effective premium discount for final term of coverage) (actual premium paid for the final term of coverage) + (effective premium discount for final term of coverage).

 

Ultimately, the Burwell court found it lacked sufficient information to fill in the variables necessary to perform this calculation.  So it sent the case back to the trial court so that the judge at that level could determine those specific values.

 

The Wilson Law Firm, a Professional Corporation,  at 1120 Iron Point Rd Suite 100, Folsom, CA 95630 handles domestic relation cases for spouses seeking divorce and other forms of relief.  Call The Wilson Law Firm, a Professional Corporation at the firm’s office at: 916-608-8891 to set up an appointment to speak with Attorney Dennis Wilson or visit its website at http://wilsonlawfirmca.com /.

 

Dissolution of Marriage – Part 4

DivorceThe Wilson Law Firm, A Professional Corporation, has been helping people through divorce proceedings for over 40 years.

This is the last of four installments about how divorce proceedings work in California.  The information shared in these blogs should not be construed as legal advice, but if you are contemplating divorce, it should provide you with a road map.

When is the Divorce Final?

Under California Law, the earliest that your divorce can be finalized is 6 months and 1 day after the petition for the Dissolution of Marriage was served on the opposing party or the opposing party formally appeared in the proceeding, whichever is first., Your marriage, however, is not automatically dissolved on that day.   Many divorce proceedings, especially marriages of longer duration, those that involve children, and those that involve family businesses or other complex property division questions, can last well over a year.  Your divorce is officially final once the court enters the divorce judgment.  At that point, the court clerk will notify you by mailing a Notice of Entry of Judgment each party in the divorce.  The date that the judgment was entered will be stamped in the upper right corner of the judgment.

Once your divorce is final, you are legally single again and can remarry when and if you choose to do so.  You will want to keep a copy of the filed divorce judgment in a safe place where you keep all your important documents.

Yet, even though the marriage is officially terminated, you may still need to have interaction with your former spouse, and your legal proceedings may not be over.  If either party is required to pay spousal support or child support and fails to do so, you may need to file a lawsuit.  If one party claims responsibility for community property debts, but then fails to pay them, the creditors may come after the other party, and you may need to employ legal means to resolve the situation.  If children are involved, then there may be future custody hearings to determine what is in their best interest as the personal conditions of each party change over time. There may be hearing so modify child support or spousal support, or hearings to terminate spousal support.

In short, divorce is often a messy legal matter that can require legal action for many years.  It is in your best interest to work with an experienced family law attorney who can help create a legal plan that will protect your best interests.  If you are going through a divorce or contemplating doing so, please contact The Wilson Law Firm, A Professional Corporation, today for your initial consultation. We will help you put the pieces of your life back together.

Dissolution of Marriage – Part 3

DivorceThe Wilson Law Firm, A Professional Corporation has been helping people through divorce proceedings for over 40 years.

This is the third of four installments about how divorce proceedings work in California.  The information shared in these blogs should not be construed as legal advice, but if you are contemplating divorce, it should provide you with a roadmap.

During the Dissolution of Marriage Proceeding

Once the Petition for Dissolution of Marriage has been filed with the court and served on the opposing party, a number of steps have to occur before the divorce is final. At the outset, either party may request a hearing to establish certain temporary court orders.  A judge may issue temporary orders to resolve conflicts regarding child custody, visitation, support, restraining orders, and control or use of property for the time the proceeding is before the court.  Once your divorce is final, these issues will be resolved on a more permanent basis in your divorce judgment, although custody and support issues may go on for many years after the entry of the judgment of dissolution.

California is a community property state.  To determine what property the parties have an interest in, what property and debt is community property or community debt, and what property is separate property, both parties will be required to exchange Preliminary Disclosure Declarations and Final Disclosure Declarations.  In these documents, the parties disclose the income they make, their ongoing expenses, their separate assets, their separate debts, what community property they know about, and what community debts they know about. If these disclosures are not adequate or if either party has additional questions, then interrogatories can be issued, depositions can be taken, and documents can be subpoenaed to ensure full and fair disclosure of all financial issues. The parties may waive the Final Disclosure Declaration, under certain circumstances, but they may not waive the Preliminary Disclosure Declaration. Once the marital assets and debts have been ascertained, the court can then properly characterize and award them to the parties.

Another main issue to be resolved during this time involves children.  If the parties had children during the marriage, then child custody and child support issues will also be discussed and resolved. To determine the child custody arrangement, the court will look at what is in the best interests of the children involved.  The court presumes that it is in the best interest of the children to have ongoing relationships with both parents unless there is evidence to the contrary.

To determine child support obligations, the court will look at the income of each party and how much time the children will be spending with that party.  Both parties are required to financially support the children.  In determining the child support amounts, the state has specific guidelines that it follows, unless there is a compelling reason to do otherwise.

If you are going through a divorce or contemplating doing so, please contact The Wilson Law Firm, A Professional Corporation, today for your initial consultation.