Business Valuations for The Self-Employed During a Divorce

The path to a smooth divorce begins with an open discussion of your marital assets. In the state of California, a self-owned business that is acquired during marriage is treated as "community property." During divorce proceedings, the court will make decisions regarding the division of this community property to ensure both spouses are treated fairly. As part of this process, the court may first require a business valuation to determine how much your company is worth.

Common Business Valuation Methods in California

Assigning a value to a business is a complex process that is best handled by an experienced business valuation expert. To arrive at a value that is fair and accurate, most California business valuations measure value based on anticipated income, existing assets, or a comparison to other businesses operating in the same market or industry. Here are some common business valuation methods:
  • Capitalized Earnings: The worth of projected profits is calculated based on current earnings and future performance expectations.
  • Comparables: A valuation is calculated using the financial performance of comparable businesses in the same industry over time.
  • Adjusted Book Value: This method involves tracking assets and liabilities at their fair market value to place a value on a business.
  • Liquidation Value: This is the approximate amount of money that would be generated if a business is sold on a rush basis.
There is no single best way to place a value on a California business. The valuer will likely consider a company's age, industry, size, and asset collection before deciding which business valuation method is the most appropriate.

Choosing a Qualified Professional to Value Your Business

Not all valuation estimates are created equal. While some are comprehensive, well-organized, and rooted in sound methodology, others are sparse and pieced together quickly without using standard procedures. Failure to choose a qualified valuation professional can lead to inaccurate, incomplete, or unfair estimates. You can avoid these pitfalls by having one of the following specialists value your business:
  • Chartered Financial Analyst (CFA): CFAs must have a minimum of four years of industry experience and also pass multiple exams.
  • Accredited Senior Appraiser (ASA): Becoming an ASA requires at least five years of valuation experience and over 123 hours of education.
  • Certified Valuation Analyst (CVA): CVAs must have two years of business valuation experience, pass an exam, and submit a peer review report.
As you evaluate possible options, look for valuation professionals who hold one of these titles and who handle business valuations specifically for divorce cases. They will be less likely to assign a value that is too high, which could lead to an unfavorable distribution of business assets. Finally, it is wise to ask potential candidates how many years of industry experience they have and inquire about whether their valuations have a proven track record of being well-received by the California court system.

The Role of Timing in Business Valuations

The role of timing cannot be overstated when scheduling a business valuation. In most cases, a business valuation takes place on the day of your settlement or your trial date. The valuation should be an accurate reflection of your company's worth while you are operating it. If your business is valued prematurely, you are more likely to disagree with the results. You may need to schedule a second report, which can be time-consuming and costly. Likewise, it is never a good idea to wait until the last minute. A reliable business valuation can take time, and delaying a valuation could prolong your divorce proceedings.

Steps You Can Take for a Smooth Valuation Process

If you are like many self-employed Californians, your business is among your largest assets. So, it is important to take the valuation process seriously to ensure you receive your fair distribution of the business assets. Here are some steps you can take to pave the way for a smooth valuation process:
  • Step One: Time your valuation with care. Do not rush. As outlined above, the timing of your valuation can be a difference maker.
  • Step Two: Organize your documentation. Records such as income statements, payroll data, and inventory reports may be needed.
  • Step Three: List any intangible assets. These are non-physical assets such as client lists, trademarks, and brand recognition.
In addition to following these steps, do not be afraid to question the results of a business valuation. Since the valuation will be used to determine the division of marital property, it's crucial to speak up and question the results if they do not seem accurate. Even better, your attorney can challenge the valuation on your behalf and lobby for a second valuation.

How a San Diego Divorce Lawyer Can Help with Your Business Valuation

The single most important step you can take to ensure fair results is to seek the guidance of a San Diego divorce lawyer. An experienced attorney can help ensure your business valuation is undertaken by a qualified professional at the proper time. Here are some other ways a skilled divorce lawyer can support you during a business valuation:
  • Fight for your rights during the property valuation process
  • Represent you through the valuation process from start to finish
  • Explain how California laws impact your property valuation
  • Help resolve any property value disputes that may arise
  • Overcome legal obstacles that may impede the process
  • Pinpoint holes or weaknesses in poorly prepared estimates
  • Help uncover any other assets that may require valuation

San Diego's Most Trusted Divorce Lawyer

Navigating the road of business valuation is not always a straightforward process. But with the help of an experienced divorce lawyer, you can rest assured knowing your business and other assets will be valued and divided fairly. The Law Offices of Steven M. Bishop are here to deliver the compassionate legal support you deserve during your divorce. For over four decades, we have helped business owners facing divorce save money while obtaining a favorable and fair business valuation. We invite you to contact us today to schedule a free phone consultation. We look forward to helping you secure the best possible outcome in your divorce case.

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5 Common Effects of Divorce on Older Children

The Holmes-Rahe Stress Scale ranks divorce as the second most stressful life event a person can experience. Second only to the death of a spouse, divorce can be so traumatic that it can have lasting effects on children who witnessed their parents' marriage dissolve. The impact of divorce often varies with a child's age. Younger children have spent a relatively short period of time in an intact family. They are usually able to adjust a bit more easily to the sudden disintegration of their family. But divorce is harder on pre-teens and adolescents who were accustomed to being part of a secure, intact family. The sudden loss of security that accompanies divorce can lead to changes in mood, attitude, and behavior. Below is a look at some of the specific effects divorce can have on older children.

Anger and Depression

Famous psychoanalyst, Sigmund Freud, referred to depression as "anger turned inward." When a marriage ends in divorce, some older children may  experience anger, depression, or a combination of both emotions. Angry children and teens may lash out at loved ones, have verbal outbursts, or even damage possessions or property. Depression is not as easy to spot, but common signs include the following:
  • A lack of interest in favorite hobbies or activities
  • Noticeable irritability or grumpiness
  • Excessive sleeping
  • Alcohol or drug abuse
If your child shows signs of depression or difficulty controlling their anger, it is best to seek the guidance of an experienced counselor, psychologist, or psychiatrist right away. A skilled mental health professional can evaluate your child's symptoms and map out a course of treatment to prevent major depressive disorder from developing.

Perfectionistic Tendencies

While some older children may act out, others may behave in a completely opposite fashion. Because they feel responsible for their parents' separation, their guilt may prompt them to try to behave perfectly. You may notice the following types of behaviors:
  • Dramatically improved performance at school
  • An increased fear of making mistakes
  • A tendency to try to control every situation
  • Procrastination due to anxiety about performing a task incorrectly
While improved school performance and attention to detail are good traits to have, it's important to help your children live a happy life. Remind them that it's okay to make an error, and they will not be abandoned if they make a mistake.

Taking One Parent's Side Over the Other

"As if the conflict between you and your spouse wasn't enough of a dagger in your side, many parents find themselves facing an allied front against their own children. In one study sample, it was reported that at the time of the breakup, around one-fifth of the children developed an alliance with one parent against the other." - Global Children's Fund
It is not uncommon for children to side with one parent over the other following a divorce. Teens, in particular, may align themselves with the parent they feel more attached to and refuse to visit the other parent. In many of these cases, they side with one parent because they feel abandoned by the noncustodial parent. In reality, they may miss the other parent and long to see them.

A Reluctance to Trust Other People

Older children who thought their parents had a strong relationship are often blindsided when news of a divorce surfaces. After the initial shock wears off, they may begin to question the longevity of their own relationships with friends and loved ones. You may notice the following:
  • Ending existing relationships out of fear that they will ultimately fall apart
  • Showing a lack of interest in building new relationships with others
  • Exhibiting a pessimistic attitude about relationships in general
These tendencies are all examples of emotional barriers that older children may establish. In many cases, they are subconsciously safeguarding against the possibility of developing a relationship that may ultimately fail like their parents' relationship did.

Acting as a Therapist

"During this difficult period, parents may be preoccupied with their own problems, but continue to be the most important people in their children's lives...Some parents feel so hurt or overwhelmed by the divorce that they may turn to the child for comfort or direction. This can add to the pressure and stress a child is experiencing." - American Academy of Child and Adolescent Psychiatry
Some older children are so mature that their parents may forget that they are not yet adults. This is especially easy to do during and after a divorce if one or both parents become overwhelmed by their own problems. They may lean on their older children for support or comfort. The children, in turn, become makeshift therapists who feel like it is their job to make their parents feel better. This can add to any pressure children are already feeling.

How can parents help minimize the stress on their children during a divorce?

Divorce can be just as traumatic for children as it is for their parents. While it may not be possible to fully prevent children from experiencing the negative effects outlined above, there are some steps you can take to help minimize stress for your children. Here are some tips to help you make the divorce process as smooth as possible for your children:
  • Tell your children regularly that you love them no matter what happens in life
  • Let your children know the divorce is not their fault
  • Remind them that most healthy relationships stand the test of time and encourage them to build strong relationships with others
  • Try to maintain as much consistency as possible in your children's lives
  • Do your best to maintain a positive outlook, as children often take cues from their parents
  • Choose an experienced and compassionate divorce lawyer to handle your case
The Law Offices of Stephen M. Bishop are here to provide the skilled and compassionate legal representation you and your family deserve. For over 40 years, Stephen M. Bishop has helped make the path to divorce as smooth as possible for California families. As a certified specialist in Family Law, Mr. Bishop invites you to contact us today for a complimentary phone consultation. We welcome the opportunity to work with you and your family.

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Tips on Co-Parenting after a Divorce

Once a divorce is finalized and the legal issues have been resolved, you must now deal with the reality of being two parents occupying two different homes. If your divorce proceedings were contentious, you may be facing some challenges knowing you will have to overcome feelings of anger, hurt, and frustration for the sake of your children. This is never easy, but for the sake of the children, this is the best option for everyone. Here are some helpful tips for making sure your co-parenting relationship remains stable.

Communication is the Key to Co-Parenting

While this may sound sensible and straightforward, we already know this is not always as easy as it sounds. The more challenging the divorce, the more contentious, the more significant the challenge. However, there are some things to keep in mind:
  • You are the parents — it is up to both of you to act like responsible adults. Your children will be counting on both of you to make sure they are not caught in a disagreement between the two of you. Initially, you and your ex-spouse may need to sit down together and air out some grievances so you can avoid having them spill over to your interactions with your children.
  • Your children need two parents — make sure you are not making unilateral big decisions on your own. Both parents should be making big decisions together. Schooling, religious, and medical decisions should be mutually agreed upon to avoid further tensions between the two of you.
  • Avoid conversation turning to confrontation — as challenging as it may be, you should make every effort to avoid a conversation with your former spouse turn into a confrontation. For example, if your child returns from a scheduled visitation and one of their belongings was left at the other parent's home, do not make a big deal of it. Let it go.
Communicating with a former spouse is never easy, particularly if you had issues communicating prior to your divorce. It will be important to have a civil relationship with your former partner to enable you to communicate effectively about important issues pertaining to your children.

Mutually Agree to Stay Focused on Your Children

Even when you and your former spouse have problems communicating, you do still have your children in common. If you can agree ahead of time to keep the focus on what is best for your children, you can overcome several challenges. Some ways to make this happen include:
  • Agreeing to teamwork — whenever possible, you and your former spouse should attempt to develop a plan for times when you may have to interact with your child at the same time. Examples of this could be sports events your child is involved in, parent-teacher events at school, or other similar events.
  • Agree to avoid demeaning each other — despite how you feel about your former spouse's shortcomings, no good can come of expressing them to your children. Your child may resent you for doing so, and it will force further deterioration in the relationship and ability to communicate with your former spouse.
  • Agree on child's boundaries — living with two sets of rules confuses children. You and your spouse should develop a plan which works for both of you for setting bedtimes, rules pertaining to study time, television/screen time, etc. as much as possible. If you are both consistently enforcing the same rules, your children will have an easier time adapting to parents living apart.
None of these things will be easy but they will make coparenting much easier than if you are both working against each other. Overcoming your differences will get easier over time, and if you can remain focused on what is best for your child (or children) it will be even easier.

Making Visits Easier for Everyone

One of the most challenging things about coparenting is when the child leaves one home and goes to the other. This is stressful for both parents, and stressful for the child. There are a few things which can help make these transitions easier including:
  • Dropping child off — rather than picking a child up from the other parent's home, each parent should drop the child off. This helps avoid interrupting something which the child and the parent may be involved in.
  • Be a bit flexible — do not get so tied into a schedule that you cannot be flexible. Unless there are pending plans which a visit to the other parent will interfere with if the child is running late, then do not get overly concerned about late drop offs (unless they become problematic, then discuss them with your coparent).
  • Prepare your child — if you and your former spouse have a set schedule, help your child prepare for their visit. Helping with packing, reminding them a day or two before, and treating the visit to their parent as normally as possible can help your child adjust to the situation.
  • Listen to your child — there may be times when a child balks at visiting their other parent. Find out why and discuss the issue with your former spouse. Do not just assume this is a passing issue, get to the root of the problem.
Nothing about splitting time between two parents feels normal to a child. The easier you can make the transitions for your child, the easier it will be for everyone involved.

Make Time for Self-Care

Part of raising a healthy child is having a healthy you. The stress associated with coparenting can cause you to ignore your own body's signals that something is not right. While your children are visiting their other parent, you should make time to do things which help you relax. This can also help with the stress of having your children away from you for periods of time.

Be Prepared for Disagreements

Let's face it, you and your former spouse are not always going to agree on everything when it comes to your children. However, each of you must do your best to avoid having disagreements in front of your children, particularly when it comes to issues which impact your child. When coparenting issues start becoming problematic, it may become necessary to consider modifying the orders the court laid out. When you need legal advice about what steps you can take to address your concerns, contact an experienced lawyer who is a Certified Specialist in Family Law, please call our San Diego office at 619-724-4148 or send us an email.

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How to Build Your Case for a Parenting Time Modification in California

One of the most contentious issues in any divorce is parenting time and child custody. Even after a divorce is finalized and the parenting orders are in place, parents are often unprepared for the lack of time they have with their child. It is important to understand that a parenting time agreement can be modified. In fact, a child custody order can also be modified under certain conditions. The primary issue a parent will have to deal with in deciding to file a modification of parenting time is whether the change is in the best interest of the child. California courts often encourage parents to review their parenting plan every couple of years to ensure the plan still works — not only for the parent, but for the child.

Parental Agreement on Parenting Time Modifications

If both parents agree that a modification should be made for any reason, they can jointly modify the plan, fill out the proper forms, and have it reviewed by an experienced family law attorney. Once the documents have been reviewed, the parents can request a court date to have the plan approved by the court. The forms which have to be filled out include:
  • Request for Order (Form FL-300)
  • Child Custody and Visitation (Parenting Time) Application Attachment (Form FL-311)
These forms provide specific details such as new visitation schedule, schedule for holidays and special family events, and other details which will help ensure your parenting plan is complete. Once these have been reviewed by your attorney, you can then file the forms with the court. In total, you should have three copies of the form for the clerk — the clerk will maintain one copy, and each parent should have their own copy once they have been marked "filed" by the clerk. Typically, in these cases, the court will approve the plan unless they feel there is an egregious issue which impacts the child negatively. So, what happens when parents do not agree that the plan should be changed? The same forms must be filled out, but you will be required to show that the situation has changed considerably to justify the changes being requested.

Demonstrating Situation Changes are Considerable

In order to facilitate a change when one parent does not agree on parenting time modifications, before you can request a change you will have to demonstrate there has been a considerable change in circumstances. Some types of significant change may include:
  • Change in parent's work schedule
  • Change in parent's work location
  • Change in how much time the child wants to spend with a parent
  • New living conditions due to the remarriage of one or both parents
To prove there is a significant change, the court may require documentation which may include work records showing changes in schedule or location, photographs of the child being involved more heavily with one parent or the other, or specific official records. Depending on the age of the child involved, a statement from the child may be appropriate as well. Your family law attorney can help you review the initial forms and advise you about what supporting documents will be needed. In addition to the forms you would take to the court clerk in situations where the parents agree on a modification, there are additional steps you must take when the parent does not agree. Once the clerk has marked the copies as "filed", the following should take place:
  • Serve papers — along with a blank copy of Responsive Declaration to Request for Order (Form FL-320), papers will have to be served to the other parent. The person serving the papers may be a law enforcement officer, an official process server, or another adult who has no direct relationship to either parent.
  • Proof of service — after the service has been completed, the server will be required to fill out Proof of Personal Service (Form FL-330) and you will be responsible for ensuring it is filed with the court. This is to demonstrate you have followed the rules and made sure the other parent is aware of your intention to modify the plan.
Keep in mind, your family lawyer can help ensure these forms are all prepared correctly, help you identify a server if needed, and be there to guide you through the process and answer any questions you may have about the next steps.

Understanding Best Interest of the Child

It is important to remember the court will always keep the best interest of the child in mind. This means, regardless of whether the parents agree on a new parenting plan, or disagree, the court will look at the plan with the child in mind. The older the child, the more likely the court may ask for their input. In general, the court will review:
  • The stability of the child's environment
  • The capacity of the parent to care for the child properly
  • The intention of the parent to ensure a stable relationship with the noncustodial parent
  • Anything else the court deems appropriate
As children get older, they may express a desire to spend more time with a non-custodial parent. Unless there are some specific reasons why this would not be a desirable situation, these requests may be approved by the court, particularly if both parents agree on the modification.

Building Your Case for Modification

The process of establishing a parenting time modification can be challenging and building a case for modification must be done carefully. While sometimes parents can agree, if you and your ex-spouse cannot agree on the modification, having your attorney involved is imperative. When you meet with an attorney, make sure you have specifics regarding why you believe a modification is in the best interest of your child and allow them to help you substantiate that claim. To meet with Attorney Bishop to discuss parenting plan modifications, please call our San Diego office at 619-724-4148 or send us an email to arrange a free telephone consultation. We represent people throughout San Diego County and Southern California in a wide range of cases involving family law matters.

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Your CA Divorce Is Set For Trial What Should You Expect?

Your CA Divorce Is Set for Trial What Should You Expect?

When you decide on a divorce, you may have expected you and your spouse to work out the challenges you were facing and simply have an agreement worked out and go to court and have your divorce finalized. Unfortunately, things do not always work out the way we expect. When it becomes impossible for you and your spouse to work out the contours of your divorce, sometimes having to have a trial is necessary. The first thing you should understand is a divorce trial is public and there are no jurors, only a judge who will render his final decision on contested issues. Prior to a trial, you should ask your attorney what the rules are pertaining to the trial. Oftentimes, there are specific rules which may apply to a specific county, department, or judge. These rules often pertain to motions, presentation of evidence, decorum inside the courtroom. Make sure you understand all of these before you go to trial.

Common California Divorce Issues to be Resolved in Trials

While every divorce trial is different, there are upwards of seven issues which a judge may have to decide upon during a divorce trial. These include custody and parenting time, child support, spousal support, attorney fees, property division, and business values and division. Each situation is unique and not all may apply in your specific divorce trial. The more complex the issues, the longer the trial. If you and your spouse were able to work out some of these issues before hand, or if they do not apply to your case, the trial will go more quickly. Having an attorney who is knowledgeable about trials is important and that is why so many people facing a divorce trial turn to The Law Offices of Steven M. Bishop, Attorney at Law.

Child Custody and Parenting During Divorce Trials

One of the most contentious issues couples deal with during a divorce proceeding is their children. Both parents believe they are the most capable of caring for their child. When presenting a case before a judge for custody, your attorney will approach the court purely with facts, and without the emotion that creates so many problems. In general, most custody disputes are settled outside of court. However, there are instances including allegations of child abuse, substance abuse, and domestic violence which can result in custody disputes going into court. The court is interested in learning what is in the child's best interest to ensure their safety, health, and education. Typically, in the case of younger children, the judge will appoint a separate attorney for the child (or children). For older children, the judge may ask to speak with them privately. It is important to note the judge's ruling will be final and will include a plan for the other parent to visit the child in cases where physical custody is awarded to one parent. In all cases of custody, "he said, she said" testimony is irrelevant. Only documented proof may be presented to the court.

Divorce Trials and Child Support Payments

California has specific statutes which govern how child support is to be handled across the state. Keep in mind, a judge may change these guidelines but must document the reason for the changes. Since the legislature has a process in place for determining child support, there are specific issues which may lead to a dispute between parents. These include income disputes, failure to secure employment disputes, and less commonly, disputes over parenting time.

Spousal Support in California

Alimony or spousal support orders are based on the length of marriage as well as the financial capacity of each spouse. In general, during the trial phase and prior to a judgment being issued, the court will order alimony based on the length of the marriage. Alimony may be temporary and may have a specific ending date or may be permanent and expire only upon a modification, the death of a spouse, or the spouse receiving alimony remarriage.

Other Unresolved Issues in California Divorces

While not always the case, in most divorces, issues pertaining to attorney fees, property division, and business values and division are fairly straightforward. Since California is a community property state, property which was obtained during the marriage, with very few exceptions, will be divided equally between the two parties. In cases where there is a business involved, there will have to be experts who properly value the business and determine what percentage, if any, the non-participants in the business should be awarded. Finally, attorney fees are usually paid by the person who has hired the attorney and only in limited circumstances would the court order the other party to pay their spouse's attorney fees.

Judge Will Render a Final Decision

After the judge has heard evidence presented by both parties and heard from the necessary witnesses and experts, they will render their final decision. The decision is handled in one of three ways:
  • Judge decides immediately and renders judgment at the end of the trial.
  • A future court ruling date is provided to the two spouses and their attorneys at which time the ruling is given.
  • The court may file a final decision in writing by the attorney representing the spouses, or the spouses directly when they are not represented.
It is not unusual for a judge to ask the attorney representing one of the spouses to prepare the final order. As you can see, divorces in California can be very complicated. It is never a good idea when you are embroiled in a dispute with your spouse, potentially forcing your divorce case to trial to attempt to represent yourself. There are too many issues which must be dealt with and having an experienced attorney on your side is crucial to ensuring the best outcome. When you are facing a divorce and you need someone who is going to help you through the process, even if that process involves a divorce trial, contact The Law Offices of Steven M. Bishop, Attorney at Law (619) 299-9780 or use our online contact form. We will do everything possible to help make this process as easy for you as possible.  

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What Happens To My Credit Card Debt After My Divorce?

California is a community property state. Because of this, many people often wonder what happens to their credit card debt after they divorce.  As with assets, there are two types of credit card debt which must be assessed in the divorce process, namely solely held debt, and jointly held debt.

Debt Which May be Sole Property

Any credit card which a person had prior to their marriage is considered sole property. All new balances are their responsibility with one possible exception: If a spouse opts to obtain a second card — an authorized user card — in the other spouse's name, the spouse making the charges may be held responsible for the debt which the authorized user incurred after the date the couple legally separated. This works differently for credit cards, which only one spouse applies for and the other has no authorized user status in California. In states where there are no community property laws, spouses may apply for credit cards only in their name. They alone have the responsibility for ensuring the monthly bills are paid on time, and the account is reported properly on their credit report. There are some significant differences in how credit cards are handled in community property states.

Credit Card Debt in Community Property States

When couples take on debt in a community property state, both people are responsible for the debt. This means even if a credit card has only one signatory and the application was filed by only one person, both are taking on the liability for ensuring the bills are paid on time. Should one spouse fail to make regular payments, it could impact the credit of the other partner since they are equally responsible for repayment of the debt.

Credit Card Debt and Divorce Proceedings

When a couple is divorcing in a community property state, the assets of the marital estate are divided between the two parties. The same is generally true for debts. However, some exceptions may apply when it comes to credit card debt, as follows:
  • Credit cards obtained prior to marriage — either party may have come into the marriage with their own credit cards and have done nothing to add the other spouse as an authorized signer. In these cases, the person who has their name on the card will retain that debt following the finalization of their divorce.
  • Single name credit cards obtained after marriage — when a married person in California applies for a credit card after marriage, both spouses are responsible for repaying the debt. If the court orders one party to accept the debt as part of the divorce agreement, both spouses are still liable until the debt is paid in full.
  • Joint name credit cards — jointly held credit cards are the responsibility of both spouses until the balances are paid in full.

Credit Card Debt Incurred After Separation

Another issue which confuses many is credit card debt which is incurred by either spouse after the date they have legally stopped living with each other. In California, this does not apply. Debts which are incurred on a credit card until the date the divorce becomes final are still the responsibility of both parties. There may be exceptions to this which must be backed by documentation. For example:
  • One spouse spree spending — if you can document that your spouse went on a spending spree following your legal separation, the court may assign that debt to them in the divorce. Keep in mind, for this to be presented to the court, you will have to document credit card balances from the date of the separation until the matter is heard in court. One important point about this: If the card is in both names, there will have to be an agreement on when the balance must be paid off because, legally, both spouses are still responsible for the balance if the card is in two names.
  • One spouse benefited — another potential way to have the court assign credit card debt to only one spouse is to show they are the only one who benefited from the use of the card. An example of this may be if one spouse has a business and was using a personal card for business purchases only. Remember, this requires documentation from the spouse claiming the other benefited. It is also worth remembering the credit card company does not care who benefited from the card; they are only interested in getting paid.

Paying Credit Card Balances After Divorce

Credit card debt which is only in your name but ordered to be paid by your former spouse is problematic if they fail to make payments. After all, this will impact your credit score. The same is true for credit cards which are held in both your names. There are some potential options to ensure you will not be liable for credit card debt which your spouse is ordered to pay as part of your divorce agreement. These may include:
  • Liquidating assets — this is likely the best option in most cases. The two partners agree on specific assets to be liquidated and the credit card balances are paid off eliminating any concern about either party being liable for the debt or facing a potential problem with credit scores.
  • Balance transfers — another possible option is to have the spouse who is responsible for the balance open a new card and transfer the balance they are responsible for to the new card.
  • Include in judgment — it is possible to ask the court to include your marital settlement agreement (MSA) as part of your divorce judgment. This would allow you to file a contempt of court request in the event your ex-spouse does not pay the bill on time. Remember, this will not protect your credit.
Dealing with credit card debt during a divorce is not easy. If you need help with your California divorce, or if you need help with credit card debt information during your divorce, contact The Law Offices of Steven M. Bishop, Attorney at Law, at (619) 299-9780 or contact us online.  

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Top 5 Ways Divorce Can Affect Your Taxes

Divorces complicate everyone's lives and when it comes time to file your tax return following a divorce, you should prepare yourself for the changes you can anticipate. As if tax filings are not complicated enough, following a divorce, you will need to be aware of the changes you can anticipate. There are a number of changes which you will have to deal with following a divorce. You may be living in a different home, you may be working for the first time in decades, and you may be dealing with other changes which you did not expect. Keep in mind, your divorce may also require you to change your overall estate plan. Most people have their spouse and children jointly listed as their heirs. Your plan may need to be modified if this is the case. Remember, you may also have to change your beneficiary designations on retirement plans and life insurance policies. With all of the changes you will be facing following a divorce, the last thing you want is to be ill prepared for the changes you may face to your taxes. Making sure you are prepared for the tax implications of divorce is important.  Here are the top five changes you can anticipate.

Understand Tax Filing Status Changes

As a newly divorced person, you will now be required to use a different filing status. Assuming your divorce is complete anytime before December 31, you will have a new filing status. Many married couples use Married Filing Jointly as their preferred method of filing. This will no longer apply, even if your divorce is finalized on December 31. Remember, tax filing status means you may be paying more taxes.

Claiming Children as Dependents

Parents who are paying child support following a divorce are not entitled to deduct these payments. Additionally, depending on who has physical custody of a child or children, there may be questions as to who has the right to claim a child as a dependent on taxes. Typically, the custodial parent has the right to claim a child on their taxes. They also have the right to claim the Earned Income Tax Credit (EITC).  Keep in mind, there may be different rules which pertain to child support payments to the custodial parent, but the fact is the parents are required to contribute to the support of their child.

Beware of Taxes on Divided Property

Thanks in large part to Internal Revenue Code (IRC)section 1041 which provides allowances for divorcing couples to claim property divisions as gifts, there may be no tax implications on a federal level depending on different factors which may impact you. Make sure you discuss property division issues and your taxes with someone who is knowledgeable about tax implications of property division. However, if you sell assets, such as a piece of real estate, liquidate stocks, or automobiles, there may be tax implications. Real estate sales capital gains taxes may be waived under certain conditions, IRC 1021 so it is important to make sure you know how this may impact you following a divorce. Remember, there is generally an exclusion for a portion of these gains.

Qualified Domestic Relations Orders (QDRO) Pertaining to Pension Plan Divisions

When a court orders pension plans be divided between spouses, the spouse who receives benefits under the QDRO may be taxable to the recipient. The only exception which is made for these distributions is there is no withdrawal penalty. It is important to work with an attorney who understands the tax implications of these withdrawals, whether you are the person receiving the benefits or the person who is required to pay the benefits. This may also have an impact on your overall estate planning.

Spousal Support and Legal Fees

In some cases, one spouse may be obligated to pay spousal support either in a lump sum amount, or over time. Taxation and deductibility of spousal support rules changed in 2019, so any divorce after this time results in the payer no longer being able to deduct the amount paid from their taxes, nor does the receiving party have to claim support as income. Let's face it, divorces can be costly and legal fees add up quickly. Some spouses wonder if the costs associated with their divorce, their legal fees, and the legal fees of their spouse if they are required to pay them, are deductible on their taxes. The answer is no, they are not deductible.

Every Divorce is Different, Every Tax Filing is Different

Just like there are no one-size-fits-all approaches to a divorce, every tax filing is different. Some divorced couples have joint business interests which may survive the divorce. Couples who have children must continue to have a strong working relationship to ensure continuity for their children. Remember, your tax situation is going to change. At the very least, your filing status will change. The changes to your taxes must be taken seriously because you do not want to have a problem with the Internal Revenue Service, or the California Department of Revenue after going through a divorce. Understanding the tax issues you will face ahead of time. Waiting for your tax reporting to come due and then learning you have a different tax liability than you had while you were married could be an unwelcome surprise. Making sure you are prepared is important, which means being prepared for those changes ahead of time.

Work With a Certified Family Law Specialist Today

Steven M. Bishop, is a certified family law specialist with over four decades of legal experience handling civil cases, including divorces and estate planning. We can be reached at 619-299-9780 or you may also send us an email. We represent people throughout San Diego County in a host of different family law matters. Contact The Law Offices of Steven M. Bishop, Attorney at Law today for an immediate consultation to have your questions about your divorce answered. Do not try to deal with a divorce on your own. There are too many issues which must be resolved.  

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CA Divorce Tips for High Net Worth Couples

Divorcing a spouse is never easy. When your assets are high, there are often more complications than if you have a modest estate. While California is a community property state, oftentimes couples have assets which they owned coming into their marriage, there may be a prenuptial or post-nuptial agreement, or one spouse may have inherited money or assets during the marriage. These can all complicate an otherwise simple division of property. Approximately nine percent of California marriages end in divorce. Many of these divorces involve challenging issues such as business ownership, pension plans, and personal items such as works of art or jewelry. This is why it is important to consider every aspect of your divorce and work with a skilled family law firm. Here are some tips that could make the process easier for you.

California is a No-Fault Divorce State

There are only two grounds for divorce in California, irreconcilable differences or one spouse's inability due to a lack of legal capacity to make decisions which is expected to be permanent. Therefore, nearly all divorces in the state fall under the category of irreconcilable differences. Keep in mind, just because one partner has filed for divorce does not mean they agree on nothing. One thing to keep in mind is it may be possible to reach amicable agreements on issues. When this occurs, the cost of your divorce will probably be less.

Consider Getting Prepared for Property Division

You can help speed up the process of divorce if you have prepared a complete list of assets which belong to you and your spouse. If one or both of you have sole assets, if you have a prenuptial agreement in place, or if you have partial ownership in a business, those assets should be included. Whenever possible, you should consider having all assets valued when meeting with a family law attorney about your divorce. Taking this step can help save time and money during the divorce process. If you and your spouse can agree on specific property division you should speak with your divorce attorney about this as well. Remember, always talk to a divorce lawyer about property division before you sign any agreements with your spouse.

High Net Worth Divorces Involving Child Support or Spousal Support

If you and your spouse both work full-time jobs, the issue of spousal support may be moot. However, if you make three or four times the amount your spouse makes, there may be cause for you to have a discussion with your divorce attorney regarding alimony payments or spousal support. Remember, a court will use a lot of different information in calculating support, including the length of the marriage, each spouse's contribution to the marriage, and the marketability skills of a non-working spouse. Make sure you discuss all aspects of support with your attorney. Child support is deemed to be the legal responsibility of both parents until a child reaches the age of 18. Should the child remain a student, the time is extended to age 19. The best interest of the child will be a primary consideration. Child support payments will be calculated based on a pre-determined formula once all sources of income from both parents have been reviewed by the courts. Other factors such as educational, health, and other needs specific to your child will also be considered. The amount of time a child spends with each parent may also be a factor. Remember, these are areas where spouses may be able to find some common ground. If it is possible to do so, you can minimize the potential for long, complicated court hearings for these matters. This means a lower cost to you for your divorce.

Prepare for the Tax Consequences of Divorce

Whenever a couple divorces, there are tax consequences. Make sure if you are involved in a high asset divorce you have spoken with a tax professional and prepare for your divorce's finalization. A tax professional can help you understand the tax ramifications of your divorce, regardless of how complicated your situation may be.

Your Assets Should Have no Impact on Custody

When both spouses are equally capable of providing a stable environment for their children, the matter of child custody is independent of your net worth. This is something to keep in mind if you and your spouse cannot agree on custody. Regardless of the final division of assets, attempting to keep a parent from having custody based solely on their income, or ability to earn will not be viewed favorably by the courts.

High Net Worth Divorces Often Require Unique Solutions

When you are considering a law firm to represent you in a divorce, you need someone who has experience handling complex divorces. High asset divorces often require individualized solutions which can make them seem more challenging, especially in a community property state. You should seek assistance from a Certified Family Law Specialist when you are getting a divorce and your estate is considered a high asset estate. This is the best way to ensure your interests are protected and that you do not make any foolish mistakes during the process.

Avoid Foolish Spending During Divorce Proceedings

While you have every right to do everything in your power to make sure you are not left financially devastated by a divorce, you also cannot do anything which could jeopardize your assets during the proceedings.  Remember, if you liquidate assets to keep them from your spouse, run up unnecessary debt, or make other bad decisions, they could come back to cause you problems during your divorce. Divorces are fraught with emotions, even when both parties agree their marriage cannot be saved. This can lead to bad decision making by either party to the divorce. Divorces do not always have to be contentious, and working with an attorney who has the skills necessary to help you navigate a high asset divorce is your best option. If you are concerned about protecting yourself or your assets during a divorce proceeding, contact The Law Office of Steven M. Bishop, CFLS today at (619) 299-9780 and schedule a free phone consultation and find out how we can help you stay protected throughout the process.  

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False Allegations in Child Custody and Divorce Cases 

Divorces where there are children involved are always complicated. Unfortunately, one of the most common issues in all divorces is custody or parenting plans. Both parents want what is best for their child, but oftentimes, the acrimony between them does not provide a sound basis for good decision making. Sadly, all too often, one partner or the other resorts to filing reports which are untrue, and this can often leave the other parent fighting back about issues which they never thought they would have to deal with. Some of the most common allegations which are common in these situations include:

  • Accusing the other party of domestic violence
  • Accusing one partner or neglecting or abusing the children involved
  • Claiming one parent has a drug or alcohol problem
  • Filing reports which state the parent is not abiding by the custody agreement
  • Filing false legal reports with the court
  • Accusing one partner of having a criminal complaint against them
Unfortunately, these types of allegations often leave you not only angry and confused, but also aggressively fighting against them to maintain your rights. Remember, since California is a community property state, some of these charges may also impact your settlement agreement.

Defending Against Unfounded Allegations

When someone makes an allegation against you in the midst of a child custody battle, or when a divorce proceeding is underway, you will have to mount a defense. Fortunately, in many cases, there are simple ways to do this. In many cases, these allegations will arise if an issue occurs which the other party is not comfortable with — for example, the judge has ruled that both parents must share custody and the other parent is unhappy about the terms. Some of the potential defenses you can use depend heavily on what the allegations include — here are some examples:
  • Drug and alcohol abuse — typically this is fairly simple to prove in a combination of manners. First, you can submit to a drug test to show you have no drugs in your system. Character witnesses such as friends and co-workers may also provide information which can be invaluable to help fight back against these allegations.
  • Child abuse or neglect — these are the charges every parent dreads. However, in many cases, they are also the easiest to defend against. Neighbors, sitters, teachers, and friends can attest to the care you are providing a child. When a child is old enough to speak for themselves, they may also provide information to a social worker, but in some instances, the child may have been coached by the other parent, so this must be done with someone who has experience handling these types of claims.
  • Domestic violence or abuse — one of the more serious allegations you may face is one of domestic violence. Since this does not always require a physical altercation, it may be more challenging to fight back. However, there are ways you can do this including forcing the accuser to provide concrete dates and locations where the reported violence or abuse took place. In some cases, they will contradict themselves, or provide specific dates or locations. If they happen to provide specific dates and locations, it is generally easy to disprove an unfounded allegation because you were in a different location.
The first thing you should do whenever there are allegations made against you during a custody dispute or a divorce proceeding is to notify your family law attorney. This is important because they will be able to advise you on how to proceed, and whether or not you may need to take additional steps to protect yourself from further allegations.

Words of Caution When Facing False Allegations

There are some things you should be aware of should someone make an accusation during your custody or divorce proceeding. Remember, it is always important to protect yourself legally. Here are some things you should keep in mind:
  • Keep your emotions in check - losing your temper because you are angry or upset can jeopardize your case and your response. Avoid discussing the accusations with friends, family or others who may be called as witnesses later.
  • Keep a record of activity - whenever you have reason to be in contact with the person making the accusation, keep a record of what the interaction is like. Also, make sure if someone tells you anything about the accusation you make note of what they told you, and when they provided the information. It may be worthwhile to capture any online activity which refers to the incident. Remember, anything which can help you can be useful, regardless of how minor it may seem.
  • Keep your lawyer informed — you should keep your family lawyer informed of anything which may have an impact on your divorce or custody proceeding. Remember, in some cases, a person who has unfounded allegations placed against them may require a criminal defense attorney, which means they will have two attorneys to keep updated.
The last thing you want to do is place yourself in further legal jeopardy. If you have a shared custody plan, or when you are picking up your children for a planned visit, you may wish to be accompanied by a trusted family member who can bear witness to the interactions between you and your partner — this could also prevent them from making further false accusations.

Divorce is Never Easy and False Allegations Complicate Matters

Keep in mind, emotions always run high during a divorce proceeding, even when both parties can agree their marriage is no longer working. Unfortunately, when a partner lashes out in anger and levels allegations which are untrue against you, you must be prepared to defend yourself while avoiding any emotional outbursts which could complicate a divorce or custody proceeding even further. If you are facing an issue because your partner has filed false allegations and you are concerned about how they may impact your child custody or divorce case, contact The Law Offices of Steven M. Bishop, Attorney at Law at (619) 299-9780 and find out your options.  

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Coping with Emotional Well-Being

Divorce is always complicated — not only is the process complicated, but chances are, the emotions you are feeling are equally as complicated. Regardless of what the circumstances are, it is common for those who are going through the process of divorce to be forced to deal with a range of emotions. Anger, sadness, confusion, worry are all normal feelings, and you may be feeling other emotions too, which you may not understand. While you are naturally concerned about your children, your own emotional well-being is also a factor which must be considered during this stressful time. You are not the only person who has ever had to fight back against the mixed feelings you have — regardless of how rocky or stable you believed your marriage was, divorce is a closing of one chapter of your life and a movement into an unknown chapter. There are some ways which could help you deal with your own emotional well-being which may help you see the broader picture and help you move into the future with the confidence you need to succeed.

Accept Your Emotions as Normal

The first step in dealing with your emotional well-being is understanding the wide range of emotions you are experiencing are perfectly normal. No matter how challenging a relationship is, the ending of that relationship is also tied to several emotions. Divorce is no different. Be kind to yourself, your emotions will settle down over time. Until they do, pay attention to each emotion and work your way through them to help your emotional well-being.

Find a Trusted Sounding Board

There is probably one or two people in your life who you feel are quietly berating you and that can complicate your emotions as well as your relationships with others. Find a trusted confidant: It may be a friend, sibling, or parent who allows you to talk about your feelings, and the range of emotions you are going through. If there is no such person in your life you trust enough to listen without judging, you may wish to consider seeking a professional who can help you work through the often-competing emotions you are trying to deal with.

Make Use of a Support Team

Your legal team, your medical team, trusted friends, and family — each of these groups will have a role to play in helping you through the complicated divorce process. It is important to remember your life going forward is going to change — you may lose some friends in the aftermath of a divorce, your financial picture will be different, and you may be living someplace else. Do not be afraid to reach out to members of your support team when you are feeling frustrated, angry, or attempting to deal with what feels like constant roadblocks. That is what they are there for.

Create and Allow Yourself "ME" Time

Many times, when a person is going through a divorce, they bury themselves in their children's activities, work, or other distractions. While this may be effective for a short period of time, you need to make some time you can call your own. Find some activity which helps you relax and refresh yourself — whether it is exercising, shopping, a hobby, or time out with your friends — create that period of time on a regular basis so you can find your own footing. You need this time for yourself because you want to make sure you are able to move on with your life without feeling resentment over your circumstances. One way to do this is to make sure you have carved out that time for yourself regularly.

Do Not Be Afraid of Self-Reflection

Some people will tell you that your best option is to walk away from your former spouse and move forward — that you will get over the situation faster if you simply do not think about it. This is not the best advice you will ever receive — you should take time to reflect on your relationship with your spouse and allow yourself to work through the emotions which are involved in that relationship. You may find you feel sad because of what has been lost — couples have high hopes for the future when they are first married, and it is common to feel a sense of loss when your divorce is in the process or finished. Other people feel excitement, fondness, anger, hurt, resentment — all perfectly normal emotions.  Work through them, try to understand why you are feeling the way you are and, above all else, allow yourself to feel them — these emotions are all part of the healing process and ignoring them will not make them go away.

Think About Preparing for Your Future

As challenging as your emotions might be at the moment, there is one way to motivate yourself and that is to create a plan for your future — yes, it is going to be different than what you may have thought a year ago, but that does not mean you should not be excited about what is to come. Whether you have children or not, you may have to consider whether you need to move, whether this is a good time to consider a career change, or whether you just need to create a path to move forward. There are few things which can improve your outlook than creating a positive path forward and taking a look into a bright future — which although different than what you may have planned, does not have to be bleak. Divorces are never easy — they are difficult on the adults involved, regardless of how many challenges they have faced in their relationship, and they are difficult for your children as well. Maintaining a healthy outlook can feel like it is an overwhelming task, but if you take the time to cope with the emotions you are dealing with as you face this new reality, things will gradually improve over time, and you can look to your future with more enthusiasm and excitement. When you are going through a divorce, working with a smart, savvy, and compassionate divorce attorney can make a difference to how you feel about your prospects. Talk to a family law specialist at Stephen M. Bishop Law today by calling our San Diego office at 619-404-2619. You may also send us an email to schedule a free consultation.  

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To talk to our lawyer about your family law issue in a free telephone consultation, please call our office at 619-299-9780. You may also send us an email. We represent people throughout San Diego County in a host of different family law matters.

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