Articles Posted in Settlement

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A marital settlement agreement can be a great tool for divorcing spouses. These agreements let the spouses decide largely for themselves how their children will be cared for, how their property will be divided, and how issues like spousal support will be handled. It is important, however, for a divorcing spouse negotiating a settlement agreement to know what he or she is agreeing to do. As California’s Second District Court of Appeals recently explained, you can’t get out of a settlement agreement later down the road simply because you’ve changed your mind.

signing agreementHusband and Wife separated in 2011, following some 14 years of marriage in which the couple had at least one child. Wife was working as a financial advisor at the time, while Husband was unemployed. They went through mediation and reached an agreement that Wife would get full custody of the child, and Husband would not be required to pay child support. In addition, Wife agreed to pay Husband a lump sum of $34,000 from a community property bank account in exchange for his pledge not to seek monthly spousal support. A trial judge later signed an order adopting the agreement.

Husband went back to court about a year later and told a judge he’d had a change of heart. He asked the judge to scrap the order, arguing that the agreement was unfair and one-sided. Husband explained that Wife handled the couple’s finances during the course of the marriage. He also said she concealed assets from him during the settlement discussions. The court agreed to reconsider the spousal support issue but otherwise said it would not revisit the agreement and order.

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Marital settlement agreements can be useful in many divorce cases because they allow divorcing spouses to decide for themselves how some or all of the issues will be resolved, instead of leaving them for a judge. As a recent case out of California’s Third District Court of Appeals makes clear, however, it is important to make sure that you have all of the information you need in front of you before you sign an agreement. That’s because they’re tough to undo.

Wedding RingsHusband and Wife separated in 2009, following some 26 years of marriage in which the couple had at least one child. Husband went to medical school during the marriage and later became a doctor. Wife was in school pursuing a master’s degree in education at the time of the split. The couple eventually entered into a marital settlement agreement – approved by a court in 2011 – in which Husband pledged to pay Wife $3,750 per month in spousal support. The agreement said Wife’s goal was to become self-supporting and provided that the support payment could potentially be modified starting in 2012.

Wife went back to court in 2012, asking a judge to set aside the 2011 judgment incorporating the settlement agreement. She alleged that Husband had concealed payments to a retirement account during the negotiations leading up to the agreement. The trial court found no evidence to support that claim. It also said Wife was too late. State law required her to seek the set aside within one year from the date on which she knew or should have known about Husband’s alleged fraud. In this case, Wife asked for the set aside nearly a year after the judgement was entered and more than a year after the couple reached the agreement.

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Marital settlement agreements are an important legal tool for divorcing spouses. These binding contracts give a couple the chance to resolve many of the issues related to a divorce without leaving them for a judge to decide. As a recent decision out of California’s Fourth District Court of Appeals makes clear, however, it is important to understand that these agreements are binding. Once you enter a settlement agreement, it’s going to be tough to get out of it.

golden penHusband and Wife separated in 2010, following nearly 18 years of marriage. They later entered into a marital settlement agreement resolving issues related to their divorce. Two years later, however, Wife went back to court and asked a judge to set that agreement aside. She said Husband didn’t disclose his assets and never properly explained to her the extent of a family business. Although she primarily speaks Spanish and has a hard time understanding English, Wife said no one translated the document for her or otherwise explained to her what she was getting into by signing it.

The family court sided with Husband, finding that Wife had waited too long to ask for the agreement to be set aside. State law required her to make the request within six months from the time the court granted the divorce and incorporated the agreement, according to the judge. To the extent she was alleging fraud, the court said she had one year from the time she discovered the fraud. The court also noted that Husband and Wife used a third-party mediator to help them reach the agreement and that they met with the mediator on at least two occasions. The family judge explained that the “use of a mediator, multiple meetings, terms that include her receiving indefinite spousal support and child support, her receipt of a substantial equalization payment, and notarization of her signature, all undercut her claim that she was forced to sign a one-sided agreement.”

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For the tens of thousands of military members and their families who live in California, government benefits often help them remain financially secure. Those benefits and the programs under which they’re provided can also raise unique issues when a military member and his or her spouse decide to divorce. California’s Third District Court of Appeals recently considered some of these issues.

soldiersHusband and Wife divorced in 2003, following 29 years of marriage. They entered into a marital settlement agreement at the time of the divorce, which laid out how they split community assets and other property. Husband served in the U.S. Navy for 17 years during the marriage and began receiving military retirement benefits in 1991. The spouses stipulated in the agreement that Wife’s share of Husband’s military retirement benefits was about $475 per month. Wife waived her right to a piece of Husband’s Social Security and disability benefits, as well as “any and all work related benefits,” under the terms of the agreement.

Husband was diagnosed with post-traumatic stress disorder related to his tours of duty in the military. After the spouses divorced, the Department of Veterans Affairs offered him special combat-related compensation in lieu of his retirement benefits. Although the amount was the same as his retirement benefits, the combat-related compensation wasn’t subject to taxes. Husband accepted the change in benefits and stopped paying half to Wife. A trial court eventually sided with Wife, however, ruling that she was entitled to continue receiving $475 per month. The court said the agreement was intended to ensure that Wife kept getting her original share of the benefits, even if Husband opted not to receive them.

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Divorce proceedings are much like other types of litigation. As in other cases, divorcing spouses are required to provide each other with certain information during the course of the proceedings in order to make sure that each side knows what they are getting into. State law allows a judge to go back and undo a ruling if he or she finds that a spouse has withheld information about their income and assets or otherwise committed fraud. California’s Second District Court of Appeals recently took on a case involving this type of fraud allegation.

wedding ringWife filed for divorce from Husband in 2012, following some 24 years of marriage. The spouses entered into a marital settlement agreement, resolving how their property would be divided and waiving their rights to spousal support. Husband later opposed Wife’s request that the divorce court enter a judgment adopting the terms of the agreement. He argued that his attorney didn’t let him read the agreement and that the lawyer incorrectly told him that he wasn’t entitled to spousal support. The court eventually sided with Wife, adopting the agreement. Wife was awarded one of the couple’s homes, and Husband was awarded the other. He was also ordered to pay Wife $12,000 to make up the difference in value of the two properties.

Husband later asked the same court to set aside the decision, claiming that Wife had secured the agreement by fraud. He said in particular that Wife had hidden two vehicles that should have been considered the couple’s community property, didn’t disclose that she had been renting one of the properties to a tenant, and misrepresented the couple’s community interest in Wife’s 401k retirement savings account. The court declined Husband’s request, finding that it wasn’t filed within the six-month deadline provided by California law.

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Sometimes after a couple divorces, they change their minds. Reconciliation can raise a number of tricky legal issues for spouses who have already decided how they will split their property, care for their kids, and resolve other issues related to a divorce. California’s Second District Court of Appeals recently took up some of those issues.

Wedding RingsHusband and Wife separated in early 2012, just two months after the couple married. They eventually entered into a marital settlement agreement, under which Husband pledged to pay Wife $12,000 in spousal support over two years. The former spouses also agreed that two homes Husband owned before they got married were his separate property and that Wife would keep the wedding ring and a related $10,000 gift. The agreement made clear that it was final and that it could not be modified, unless agreed to in writing. A court approved the settlement agreement and ordered that the marriage be dissolved, effective four months later.

That’s when things took an interesting turn. “Within two days of signing the MSA, the parties declared their love for each other in text messages,” according to the Second District. Within a year, Wife was again living with Husband in one of his homes. Husband apparently continued to wear his wedding ring and treated Wife publicly as his spouse. He also continued to pay the spousal support. Husband and Wife separated a second time about 10 months after Husband finished making the support payments.

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Settlement agreements are often an efficient way for spouses divorcing in California to resolve some of the issues related to the split without leaving them to the whims of a local judge. These agreements are binding, legal contracts that are treated by courts as such. That’s the main takeaway from a recent decision out of California’s Fourth District Court of Appeals, in which the Court resolved a dispute over stock shares.

paperworkHusband filed for divorce from Wife in May 2010, following nearly 30 years of marriage. During a month-long trial, Husband argued that three transfers of stock from a company called AVD were gifts from his father that should be considered separate property. The trial judge appeared to be ready to side with Husband, but the parties reached a settlement agreement shortly before that ruling. Husband’s lawyer wrote out the initial agreement by hand. It stated that Wife would get 390,000 shares of AVD stock and that the remaining 884,000 shares would go to Husband.

When Wife said she couldn’t read the agreement, her lawyer wrote out a second version of the deal. The second stipulated agreement also allotted 390,000 shares to Wife but only 553,000 shares to Husband. A trial court eventually weighed in after a dispute over who would get the more than 300,000 shares unaccounted for in the second stipulation. It held that Wife was entitled to 390,000 shares and that the remaining 884,000 shares should go to Husband.

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A marital settlement agreement is an important tool for divorcing spouses. It allows a couple to resolve many or all of the issues related to their divorce without having to resort to drawn-out litigation. As a recent case out of California’s Fourth District Court of Appeals shows, however, it’s important when negotiating such an agreement to understand just what it is that you are agreeing to.

paperwork-3-488174-mHusband and Wife separated in 2012, following a nine-year marriage. The couple had a son during the marriage, and Wife also had a daughter from a previous relationship, who was about 11 years old at the time of the split.

Husband worked as a financial adviser during the course of the marriage and moved to a position with a new employer in 2010. Under the terms of that arrangement, he was paid two bonuses totaling about $1 million up front. The bonuses were designed as a “loan,” under which Husband was supposed to pay the money back over time. His contract further entitled him to annual “bonuses,” which were intended to cover his payments on the initial bonus/loan. The only problem was that the employer had to withhold state and federal taxes from the annual bonuses. That left the bonuses short of Husband’s annual amount owed on the initial bonus/loan. The rest of the payment was deducted from his paychecks.

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If you’ve been keeping an eye on the ongoing divorce battle between former L.A. Dodgers owners Frank and Jamie McCourt, you may want to know about a recent appeals court ruling in the case. If you haven’t been watching, the case provides a good example of some of the business valuation and property division issues that can come up in California divorce proceedings.

file0002123706631Jamie and Frank McCourt married in 1979 and split their time in New York, Massachusetts, and California over the next three decades. Jamie worked as a corporate lawyer, while Frank started a successful property development company. They eventually moved to the L.A. area, when Frank bought the Dodgers, the team’s stadium, and the surrounding real estate in 2004.

Frank told Jamie at the time of the deal that he believed the team was worth more than $2 billion. The Dodgers were under contract with a Fox Sports Net affiliate, in which the TV station was granted exclusive cable television rights until the end of the 2013 baseball season. Jamie ultimately became the team’s president and ran the Dodgers’ day-to-day operations from 2004 to 2009. During this time, the Court later explained, she reviewed an “offering circular” that the team had prepared for potential investors. The document valued the club at $963 million and its television rights – including the right for the team to start its own TV station after the Fox contract ran out – at just more than $1.5 billion.

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Mediation is often an attractive alternative to what can be costly and time-consuming litigation for spouses seeking a divorce. As the state’s Second District Court of Appeals recently explained, a settlement agreement reached via mediation will generally be enforced by family courts.

paperwork-3-488174-mHusband and Wife separated in 2004 after roughly 23 years of marriage. When Wife filed for divorce the following year, the couple agreed to take their case to a mediator. As a result of the mediation sessions, they reached a proposed stipulated judgment. The agreement provided for the division of the couple’s homes and other property, as well as custody and visitation rights with respect to their minor child. It also stated that Husband would pay Wife $2,000 in spousal support through August 2020. The document further stated that it was a marital settlement agreement resolving all necessary matters related to the divorce.

Nevertheless, neither Husband nor Wife ever filed the agreement with the family court. As a result, the court dismissed the case for lack of prosecution in May 2011. In the weeks that followed, Wife sought to have the case reopened so that the court could recognize the agreement and retain jurisdiction to enforce it if necessary. Wife said she had been under the impression that the mediator would file the document with the Court.

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