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Money Mismanagement and Spousal Support – In re Marriage of McCallon

When a spouse in a divorce case asks to modify the amount of spousal support that he or she is either paying to or receiving from the other spouse, California courts usually look for evidence to show that there has been a “material change in circumstances” related to either party’s ability to support themselves. As the state’s Fourth District Court of Appeals recently explained, a spouse’s mismanagement of his or her money may come into play if the person seeks an increase in support as a result, but it isn’t enough to justify reducing the support that the spouse already receives.

usa-dollar-bills-1431130-mHusband and Wife separated in September 2002 after roughly 21 years of marriage. They later entered into a marital settlement agreement (MSA), under which Husband agreed to pay Wife $1,100 per month in spousal support. The agreement stated that the payments would continue until Wife remarried, either party died, or a court ruled otherwise. Husband also agreed to give up his community property interest in the couple’s home and to do so without being compensated for that interest.

Wife later inherited $200,000 after her mother died, according to the Court, as well as a one-third interest in a condominium property. After the property was sold, she used her share of the proceeds to buy another condominium. She also invested roughly $500,000 in a business around the same time. The company ultimately failed, and she was unable to recoup any of her investment.

Nearly nine years after entering into the MSA, Husband sought to discontinue the spousal support payments. A trial court agreed with Husband that the payments were no longer necessary and reduced his monthly obligation to $0. The trial court found that Wife had adequate financial resources available to her without the spousal support. Indeed, it observed that her $500,000 business investment totaled more than 37 years’ worth of support payments.

Reversing the decision on appeal, the Fourth District said that the trial court had jurisdiction to revise the spousal support obligation, but it found that the lower court erred in reducing the payments. Specifically, the Court said there was no evidence to show that a material change in circumstances had occurred since the time Husband and Wife entered into the MSA.

“[Husband]’s ability to pay did not diminish, and there was no significant reduction in [Wife]’s need,” the Court explained. It also said that Wife’s failed business activities didn’t change this analysis. “[M]ismanagement of funds intended to make the supported spouse self-sufficient may be relevant when the supported spouse seeks an increase in support to offset the income lost by the mismanagement,” the Court said. “It is not relevant, however, where the supporting spouse seeks a reduction in the amount of spousal support, no other material change of circumstances has been established, and no evidence shows the funds were intended to make the supported spouse self-sufficient.”

As a result, the Court remanded the case back to the trial court with instructions to deny Husband’s motion to modify the spousal support payments.

Spousal support is just one of the many legal issues that often arise in California divorce cases. With more than 30 years of experience, San Jose divorce lawyer John S. Yohanan is an accomplished divorce attorney who has helped a number of clients resolve spousal support and other matters on optimal terms. Call our office at (408) 297-0700 or contact us online to schedule a consultation.

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Standard of Living in California Spousal Support Cases – In re Marriage of Rood and Thompson

Pre-Divorce Agreements and Financial Disclosures in California Divorce Cases – In re Marriage of Evans

Income and Spousal Support in California Divorce Cases – In re Marriage of Whalen