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LONICH PATTON EHRLICH POLICASTRI
1871 The Alameda, Suite 400, San Jose, CA 95126
Phone: (408) 553-0801 | Fax: (408) 553-0807 | Email: contact@lpeplaw.com
LONICH PATTON EHRLICH POLICASTRI
Phone: (408) 553-0801
Fax: (408) 553-0807
Email: contact@lpeplaw.com
1871 The Alameda, Suite 400
San Jose, CA 95126
Located in San Jose, Lonich Patton Ehrlich Policastri handles matters for clients in northern California, specifically San Jose and Silicon Valley. Our services are available to anyone within the following counties: Santa Clara, San Mateo, Contra Costa, Santa Cruz, Monterey, San Benito, and San Francisco. For a full listing of areas where we practice, please click here.
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Debt During Divorce: Who’s Responsible?
/in Family Law /by Gina PolicastriA big question often arises in divorce settlements – who is responsible for the debt? It’s a complex question requiring a degree of nuance in determining. In particular, California divorces have unique circumstances relating to community property.
What is community property?
Community property is a critical concept to keep in mind when initiating the divorce process, especially in California, a community property state. Any income of either spouse and real or personal property acquired by either person during the marriage falls under community property – though this does not include gifts or inheritances.
This means that both spouses share equal ownership rights for any earned income or property – but beware that this means debt also falls under community property.
Who is responsible for any jointly accrued debt?
Under California community property law, any financial obligations incurred during your marriage become the responsibility of both spouses during a divorce. Premarital debts brought into the marriage could also become the responsibility of both parties.
There are, however, some exceptions to this. Separate property is acquired before entering the marriage and therefore does not become shared community property. This can be things like a house or vehicle owned before the marriage. As long as the funds for payments on this property come from a separate source and not from income generated during the marriage, the property remains separate.
If funds do become mixed, this is considered co-mingled property and can be tricky to sort out. This can happen in situations where an initial property was considered separate but was sold, and the funds were then used to buy another asset that was partially paid for with community income as well.
How can you protect yourself from liability?
For individuals who are considering nuptials but haven’t yet said “I do,” a pre-nuptial agreement is worth discussing. An agreement like this might outline that both spouses agree to treat their debts and income separately.
While no one wants to think about a future divorce as you plan a wedding, a pre-nuptial agreement can ensure you and your spouse-to-be are on the same page in the event something should happen down the road. This allows you to discuss with a level head, not in the event of a divorce when emotions are running high.
How can an attorney help?
Although community property can be a complicated matter, it doesn’t necessarily mean that you need to appear before a judge to sort out the property division. Often, attorneys can help a divorcing couple come to an agreement, though note that in California, a judge will still need to sign off on the final agreement with a court order to ensure its validity.
If you have questions regarding a division of debt in your divorce, call (408) 553-0801 or click here to schedule a free 30-minute Family Law or Estate Planning consultation. Lonich Patton Ehrlich Policastri’s experienced attorneys specialize in divorce and family law and can help with your divorce-related debt questions. With over 100 years of combined experience, the Family Law group at LPEP can help you navigate even the most complex of family law and estate planning matters in California.
Recently Divorced? Take Advantage of Potential Tax Breaks
/in Family Law /by Gretchen BogerFor many people, getting divorced is a difficult and life-changing experience. While there are undoubtedly challenges that come with divorce, it’s important to consider that there may also be some potential tax breaks available as both partners go through this process.
Determine your tax filing status
If you were legally married as of December 31, you can file a joint tax return. This allows you to combine your income with your spouse to receive a higher standard deduction.
If you can’t file jointly, you can still consider filing as head of household, which also has the benefit of a bigger standard deduction and more lenient tax brackets. However, only one spouse can file as head of household, and there are several requirements to be eligible: you must have had a dependent living with you for at least half the year, and you must have paid for more than half of the upkeep of your home.
Alimony and Child Support
If you have an alimony agreement put in place before 2018, you can deduct the payments as an above-the-line deduction. However, if you began an agreement after 2018 or changed an existing agreement, the payments will not be considered deductible. The IRS also requires the recipient’s social security number to be reported, so they can track it to make sure it’s reported as received income.
Child support payments are handled in a separate manner. You cannot deduct nor be taxed for any child support payments made or received.
Claiming Dependents
After a divorce is finalized, only the custodial parent can claim children as dependents. The custodial parent is the parent with whom the children live with more nights during the year. This parent can claim the earned income tax credit and other credits such as higher education tax credits.
There is an exception to this – a custodial parent can fill out a Form 8332 waiver and transfer dependent status to the non-custodial parent on a yearly basis. This could make sense in a situation where the non-custodial spouse falls in a higher tax bracket.
Children’s Medical Expenses
If you contribute towards a child’s medical bills, you may also be eligible to include this in your medical expense deductions. This applies even if you aren’t the primary custody holder. However, the expenses would need to exceed 7.5% of your adjusted gross income to be eligible.
Asset Transfers and Sales
It’s important to consider the possible tax implications involved with transfers of assets. While there is no tax responsibility for the recipient when a property is transferred during a divorce, they would be responsible for capital gains taxes on the appreciation of the house if and when it was sold.
You may also decide jointly to sell a home. In this situation, if you have owned the property and lived there for at least two out of the previous five years, both spouses can exclude up to $250K each if filing separately, or $500K if filing jointly.
If you live in the San Jose, CA area and have questions about the tax implications of a pending divorce, call (408) 553-0801 or click here to schedule a complimentary consultation. Lonich Patton Ehrlich Policastri has a team of experienced attorneys specializing in divorce and family law who are ready to help you.
What Is The Difference Between A Living Will & A Final Will?
/in Estate Planning /by Michael LonichHave you ever heard the terms “living will” and “final will” and wondered what the distinction is, exactly? Are you thinking about estate planning and the outline of your own end-of-life plans? Both types of documents help you and your loved ones feel secure knowing that your wishes will be adhered to, but how can they accomplish that?
What Is A Living Will?
A living will is also called an Advanced Health Care Directive. Its purpose is to make sure that, in the event that you cannot articulate your own healthcare preferences, they will still be honored. It allows you to appoint a family member or friend as your medical power of attorney. This person should know you well and be willing to communicate with physicians and other healthcare providers on your behalf. If you have specific preferences and instructions regarding treatments you would or would not want, your living will can lay these out.
You remain in control over your medical decisions even if you have created a living will. An Advanced Health Care Directive would only come into effect if you are deemed medically incapacitated. Once it is in force, any healthcare provider must follow what you have laid out in your living will and listen to your appointed agent. However, it is essential that your family, your doctors, and especially your agent all have access to your living will in the case of an emergency. The state of California also maintains a registry of Advance Health Care Directives so that every relevant party can access and follow your wishes.
What Is A Final Will?
A final will is what you probably imagine upon hearing the term: a last will and testament. It is an estate planning tool that allows you to set forth who shall inherit which parts of your estate, amending the automatic apportionment based on state law. If you do not have a will in California, your spouse receives all of your joint property and part of your separate property, with the remainder divided among your children. If you do not have a spouse or children, your estate is apportioned to your relatives, or, if none are found, it is given to the State of California.
You may choose to use a final will along with a trust, which can allow your assets to avoid the probate court supervision process altogether. However, a final will is critical regardless of your financial situation and it is an important part of your estate plan. It gives you the opportunity to name a guardian for any of your children who are minors and to appoint an executor of your estate. This person is responsible for seeing that the wishes, as you’ve laid out, are carried out properly and your finances are in order. You will also want to keep it up to date. Revisions may be in order after major life changes such as marriage, the birth of a child, divorce, or even a new relationship if you wish for your unmarried partner to receive any of your estate, which they are not automatically entitled to under California law.
Both types of wills give you and your family peace of mind knowing that no matter what, you have a well-thought-out plan in place. For a more in-depth look at wills and estate planning, have a look here. If you are located in or around Santa Clara, contact Lonich Patton Ehrlich Policastri to set up a virtual consultation with one of our estate planning attorneys.
How To Handle Late Alimony Payments
/in Family Law /by Riley PenningtonOne of the most delicate situations caused by divorce is the awarding and collecting of spousal support payments. While the wage garnishment process attempts to alleviate the burden of collecting payments each month, there are situations in which people fall behind on their payments. Late alimony payments are stressful to deal with and it is important that you understand your rights in obtaining your spousal support in California.
While a significant “change in circumstances” can legally and temporarily give the spousal support payor the right to modify spousal support, there are serious consequences for neglecting to pay spousal support and judges typically favor the person receiving the support.
Delay Due to Financial Hardship
If your ex is falling behind on alimony payments, the first thing that you should do is try to understand why. It might be that your ex has suffered from a recent financial hardship such as the loss of a job, and you might want to take that into consideration before you let your frustration drive your decision-making.
If this is the case, and you believe that they will likely find a job soon and continue to pay the alimony payments, then you might want to consider creating a written agreement that modifies or temporarily suspends the required spousal support payments until your ex has a new source of income. If you chose to do this, it is highly advised to hire a spousal support lawyer so that you know that your rights are protected and you will continue to receive your mandated spousal support once the financial hardship is remedied.
Late Payments Due to Neglect
While the wage garnishment process tries to alleviate the burden of collecting payments, people who are self-employed or unemployed are not subject to having their wages garnished to pay spousal support. In these circumstances, you can fight for your spousal support by placing pressure on your ex to either obtain a job that fits their experience and earning capacity or maintain their payment schedule.
The state of California offers support in the form of the Local Child Support Agency (LCSA) (known as DCSS in Santa Clara County) if the parties have children and the spousal support affects the children’s well-being.
If the LCSA is not already involved in your spousal support, and you’re dealing with late alimony payments, then you should hire an attorney to help you in your fight to obtain your spousal support. You may have the following options:
If the LCSA is already involved in your spousal support, then the organization can assist you with:
If you are facing difficulty with obtaining spousal support payments from your spouse in California, then it is strongly recommended to speak with a spousal support lawyer. LPEP specializes in divorce and family law and has the resources you need to help you obtain your owed alimony payments. Schedule a free consultation by clicking here or calling us at (408) 553-0801
How Is A High Net Worth Divorce Different From Other Divorces?
/in Family Law /by Virginia LivelyDivorce is often a contentious matter. Emotions can get in the way and cloud one’s judgment. Tensions run even higher for couples with a high net worth. There’s more at stake when it comes to property division, child support, and spousal support. High net worth divorce differs from standard divorce in many ways. Our divorce attorneys discuss some of these ways below.
Property Division & High Net Worth Divorce
Couples with a high net worth have more property and assets than the standard couple going through a divorce. This means that the division of property is far more complicated, and often, more tumultuous. It requires much more attention to ensure both parties are satisfied with the outcome.
California is known as a community property state. This means that assets and debts acquired during marriage are considered community property and are divided evenly between the parties.. The marital estate can include family homes, family businesses, retirement accounts, 401ks, pensions, IRAs, vacation homes, and any investment properties among other things. It can also include stocks, bonds, mutual funds, and offshore accounts, among other assets such as jewelry and personal effects. Often, the way in which the assets are divided is determined by the Court because high net worth marriages have complicated issues such as reimbursement claims, separate property claims, and other considerations. This process often causes resentment, especially if one party contributed to the finances more than the other. Legal fees can also run higher as couples with a high net worth typically require longer legal assistance to sort property division out, which can rack up lawyer fees and court fees.
Spousal Support
Often in marriages with a high net worth, there is a disparity in income between the two parties. In these cases, spousal support may be necessary. In California, the courts are not under any obligation to provide spousal support, but if there is a discrepancy in income between the two parties, it will often be awarded. The amount and frequency of the payments are subject to change and vary case by case. In California, the courts usually award two types of alimony – temporary alimony and permanent alimony. They can also award lump-sum alimony and rehabilitative alimony. The courts may deem larger support payments in a high net worth case based on what they view as fair according to the couple’s standard of living during the marriage. This can be a costly decision for spouses who own their own businesses as court discretion rules heavy over standard calculations that apply to smaller estates.
Child Support in a High Net Worth Divorce
Child support is different in high net worth cases as well as there are typically expenses that don’t apply to smaller income households. Children who come from a high net worth family typically have expenses such as private school, boarding school, or expensive competitive sports training or other extracurricular activities. Trusts are also frequently involved in these cases. As with spousal support, the judges will determine when the payments are due. Whereas in lower income brackets, there are standard calculations the courts typically rely on, in larger asset estates, court discretion is more heavily relied on for additional children’s expenses.
Get An Experienced Attorney On Your Side
High net worth divorce is typically a longer and more costly process than standard divorce proceedings. If you expect to be involved in a contentious high net worth divorce, you need the best divorce attorney on your side. Our law firm, serving San Jose, Santa Clara and the Greater Bay Area Counties, has extensive experience managing high net worth divorce cases. We offer free 30-minute consultations to those in need. Set up your consultation with Lonich Patton Ehrlich Policastri by clicking here.