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California Court Determines Husband’s Transfer of Business Interest to New Wife Was Made in Bad Faith

Earlier this month, the Court of Appeal for the Second Appellate District issued an interesting written opinion in a California spousal maintenance case in which the husband was seeking to terminate a court order that he pay spousal support based on a change in circumstances. The court rejected the husband’s request, however, since it determined that the husband’s transfer of his business to his new wife was done in an attempt to avoid paying spousal support. As a result, the husband was required to keep making spousal support payments into his retirement.

GavelThe Facts of the Case

In 2009, the husband and the wife divorced, and the husband was ordered to pay spousal maintenance payments in the amount of $9,500/month. That figure was later lowered by agreement to $4,000. In 2015, the husband sought to eliminate the payments altogether, claiming that his retirement constituted a change in circumstances.

Prior to his retirement, the husband, a retired police officer, ran a private investigation and security business. He paid himself a salary of approximately $50,000 annually, and the business generated an additional $220,000 in business income each year. The husband claimed that he had retired, and the business was now in the hands of his new spouse.

The wife objected to the husband’s request to terminate benefits, arguing that the only reason he transferred the business into his new spouse’s name was to avoid paying spousal support payments. In support of her argument, the wife presented evidence showing that the husband transferred the business to his new spouse for no consideration.

The court agreed with the wife, finding that the transfer of the husband’s interest to his new spouse was done to avoid the husband’s responsibility to pay spousal support. The court explained that, while the husband may no longer be running the business, it is reasonable to assume that the business would still be generating a profit. Thus, while the husband was no longer receiving his $50,000 salary, the court imputed $50,000 in business income to the husband, keeping the amount of spousal support the same. The court also explained that, if the husband’s income really did change, he would be able to submit proof to the court in a subsequent request to reduce or eliminate the spousal maintenance payments.

Are You Going Through a Bay Area Divorce?

If you are currently going through a Bay Area divorce, or you would like to initiate divorce proceedings, you should meet with a dedicated California family law attorney as soon as possible. John S. Yohanan, Attorney at Law, is a knowledgeable Bay Area divorce attorney who has decades of experience representing clients in all types of family law matters. Attorney Yohanan understands that the divorce process is a deeply personal one, and he makes sure to respect each client’s needs. To learn more about how Attorney Yohanan can help you with your San Jose family law issues, and to schedule a free consultation to discuss your needs, call 408-297-0700.

Related Blog Posts:

California Child Custody Cases: Gauging Best Interests, Bay Area Divorce Attorney Blog, August 31, 2017

California Appellate Court Determines Life Insurance Policy Purchased with Joint Funds Is Community Property, Bay Area Divorce Attorney Blog, September 22, 2017