Divorce Trial Evidence: Authenticity and Hearsay

Authenticity and hearsay.

You have your own list of documents or other physical evidence you need, and one from your expert or experts.

The first step: When it comes from the other side, it is good to go.

Your spouse will have to produce at least one Declaration of Disclosure, and you may issue Discovery requiring your spouse to produce information or physical evidence, usually documents. When it comes from your spouse as part of their Declaration of Disclosure, or as a response to Discovery, you are done: the evidence’s authenticity is established and your spouse is estopped from making a hearsay objection.

This is why it is very important to make sure that your spouse’s Declaration of Disclosure is complete and states a position regarding each assets and debts characterization (whether it is community or separate property) and value. If your spouse’s Declaration of Disclosure is lacking, then you can and should ask for a complete response from them, to create a document that you can use at trial.

Voluntary production.

Your spouse or their attorney might also produce discovery to you voluntarily. If so, it’s important that you have some means of proving that production: e.g., at a trial you still may have to prove that your spouse gave you two-hundred pages of bank documents two years earlier.

The safest route would be to ask them to list the produced items in a dated and signed letter along with a verification—a signed statement under penalty of perjury.

Your documents, documents from third parties, and Declarations of Custodian.

For any item of physical evidence that you or your expert needs that has not been produced by the other side (e.g., documents you subpoena from third parties, or have acquired yourself), in most cases, if these are business records, you can admit the evidence so long as they are accompanied by a “Declaration of Custodian,” a document from the third party institution that verifies that the identified documents are authentic and should be admitted without the live testimony of the person who drafted the documents.

Generally, you can get a Declaration of Custodian for your documents by issuing a discovery demand called a “Deposition Subpoena for Production of Business Records” to the institution. If you use an attorney service to draft this discovery demand, they will also draft a Declaration of Custodian.

Authenticity is easy to understand. Hearsay can be tricky: generally, when a party at a trial tries to enter evidence of a statement, the other side has the right to question the person who made the statement (this is called cross-examination). When the person who made the statement is not at the trial, and ready to be questioned about what they said, this statement may be excluded as hearsay. Certain business records, even though they contain statements, do not require the testimony of the person who made the statement—this is what is called an exception to the hearsay rule. A good Declaration of Custodian can establish that documents are authentic and are exempt from the hearsay rule.

You will need a Declaration of Custodian for all documents you wish to admit as evidence, unless the Expert Rule (see below) applies. If you can’t get one, you will need to subpoena the person who drafted the document.

Warning: Seven years?

Most institutions (e.g., banks) will not hold documents for more than seven years. Keep this in mind if you are getting close to five to seven years from the point that important documents were created!

Warning: Experts and Foundation.

There is an important rule to consider when analyzing documents your expert will rely upon to formulate their opinion. In California the court has the discretion to admit evidence that an expert has relied upon in forming their opinion, when an expert would normally rely upon that type of evidence in doing so. E.g., if an accountant would normally review bank documents when tracing money and you have bank documents that you couldn’t get a Declaration of Custodian for, then the court may admit those documents and the expert opinion which relies upon them.

The operative word here is discretion: the judge does not have to admit other inadmissible evidence relied upon by your expert. This could result in a successful objection to that portion of your expert’s opinion which relies upon the un-admitted evidence.

At Divorce Helpline, we have 25 years of experience coaching clients in navigating the tricky waters of trial preparation. For more information on divorce trial evidence see our previous blog on Two Types of Physical Evidence.

Divorce Trials – The Two Types of Physical Evidence

Documentary evidence can be divided into two general categories, much like opinion testimony can.  There are “lay opinions,” which are opinions which are based on observation and which anyone can make without special training, and there are “expert opinions,” which are opinions that can only be made by individuals with special training (“experts”).

In much the same way there are documents and other evidence which are presented to prove facts and which do not require interpretation (e.g., a bank statement which is offered to prove how much money was in an account on the Date of Separation), and there are documents which an expert relies upon to support his or her expert opinion.

With either type of physical evidence, in order to prepare your case for trial (or a convincing settlement letter), you have three broad tasks:

  1. Determine what physical evidence you need, and once you know
  1. get the evidence, and
  1. make sure its admissible, i.e., that the court will consider it as evidence.

Figuring out what you need:  general facts.  First compile evidence that goes to prove general facts that you need to establish and for which you don’t need an expert (e.g., a Date of Separation bank statement).

What an expert needs.

If you need to use an expert, then it is vital to establish as early as possible

  1. exactly what the expert is going to testify to; and then
  1. exactly what she needs to support that testimony.

Getting it.

If you can’t procure it yourself, then you will have to rely on “Discovery,” which are a series of legal tools which require your spouse or a third party to produce answers to questions, documents, etc.

Discovery is a subject we will address in other blog posts. For this discussion, all you need to know is you can try to gather documents from

  1. Your spouse’s Declaration of Disclosure – Each spouse is required to serve on the other a document laying out their positions on what is community and separate property, and their positions on values of assets and debts.
  1. Documents your spouse produces voluntarily.
  1. Documents produced by discovery demands you serve on your spouse and on third parties.

Will the court consider it?

Generally, the court will consider evidence if it is relevant (it tends to prove or disprove something), if its authentic, and, regarding written evidence or other statements made out of court, it is the kind of written evidence where the original speaker or writer doesn’t have to show up and testify (i.e., there is an exception to what is known at the “hearsay rule”).

Relevancy won’t be an issue if either:  the evidence proves something on its face or your expert says she needed it to render an opinion.

Check out the continuation of this blog in the following post, Divorce Trial Evidence: Authenticity and Hearsay. At Divorce Helpline, we have 25 years of experience coaching clients in navigating the tricky waters of trial preparation.

Inherited Property: Applying Direct Tracing in Family Law

In our example the spouse who inherited must show whether separate funds deposited continued to be on deposit when a withdrawal was made for purchasing the stock, and whether it was their intention to withdraw separate property funds for that purpose. These are questions of fact for the trial court. (Hicks v. Hicks (1962) 211 Cal.App.2d 144, 157.)

In Hicks, the plaintiff produced evidence that he deposited separate property funds exceeding the withdrawals made for separate property purchases. (Id. at 158.) Evidence establishing the availability of sufficient separate funds for separate purposes supports an inference that the owner thereof used such funds for such purposes. (Estate of Goodhew (1959) 174 Cal.App.2d 75, 80.)

In Marriage of Mix (1975) 14 Cal.3d 604, the Supreme Court held that a wife had satisfactorily shown a direct tracing of the source of funds used to acquire each item of her disputed separate property:

“Esther introduced into evidence a schedule compiled by herself and her accountant from her records which itemized chronologically each source of separate funds, each expenditure for separate property purposes, and the balance of separate property funds remaining after each such expenditure. She received $99,632.02 attributable to her separate property; expended $42,213.79 for separate property purposes, leaving an excess of separate property receipts over separate property expenditures in the amount of $57,418.23 throughout the course of the marriage.”

(Id. at 613.) The Supreme Court found that the “schedule demonstrated that Esther’s expenditures for separate property purposes closely paralleled in time and amount separate property receipts and thus established her intention to use only her separate property funds for separate property expenditures.” (Id.)

However, Esther was unable to correlate the expenditures of separate property funds with any bank account due to the unavailability of bank records. By itself, the Court held that the schedule was “wholly inadequate”

to meet the direct tracing test. (Id. at 613-614.) However, it noted that the trial court was entitled to accept Esther’s testimony “that the schedule was a true and accurate record, that it accurately reflected the receipts and expenditures as accomplished through various bank accounts, although she could not in all instances correlate the items of the schedule with a particular bank account, and that it accurately corroborated her intention throughout her marriage to make these expenditures for separate property purposes, notwithstanding her use of the balance of her separate property receipts for family expenses.” (Id. at 614.)

“The testimony of a witness, even the party himself, may be sufficient.”

(Id. at 614, citing 6 Witkin, Cal. Procedure (2d ed.) § 248, p. 4240.)

In our example, how can the inheriting spouse connect separate property purchases using inheritance funds to the joint account in which all of the inheritance funds were deposited and from which all purchases of stock were debited through cashier’s checks?

Bank account statements and checks will show deposits of inheritance funds into the account. Bank statements and checks can show the expenditures of separate property for the stock.

Similar to the Mix case, if the balance of her inheritance funds in the account exceed her expenditures on separate property stock purchases, she then merely needs to establish her intention to use her separate property to purchase the stock for herself.

She can testify that she intended to make separate property purchases with her inheritance funds. Unless there is evidence (such as statements in emails, witnesses, etc.) that show an intention to purchase the stock on behalf of the community, her testimony will likely be sufficient. (compare Marriage of Ficke (2013) 217 Cal.App.4th 10, 26 (noting testimony of single witness may constitute substantial evidence of tracing)—no need to produce specific records where H testified mortgage payments on his SP rental were made from rental proceeds account that was never commingled with CP earnings.)

At Divorce Helpline, we regularly work with court-experienced accounting professionals to help our clients navigate through difficult financial analyses, such as Tracing, at a fraction of the cost they would incur in litigation with our services.

Direct Tracing Separate Property in Family Law Actions

Using a Direct Tracing test, you can establish that what you purchased from a community account is a separate property asset when you can show

  1. Your separate funds (e.g., from an inheritance) were deposited with community funds (e.g., into a joint account), and 2. they continued to be on deposit when you withdraw the money for the purchase, and 3. you intend to withdraw your separate funds specifically. (See In re Marriage of Frick (1986) 181 Cal.App.3d 997, 1010-1011.)

Under Direct Tracing, the disputed property is traced to the withdrawal of separate property funds from the commingled account.

For this example let’s imagine you have inherited $100,000, deposited it into a community account, then later pulled it out to purchase $100,000 worth of stock.

To show Direct Tracing, you would first prove that you deposited the inherited money (intended only to go to you).  Let’s say you have the will or other testamentary document and have documents  showing the money flowing from the deceased’s estate and ultimately into the joint account.

Then the stock was purchased:  you would need to prove how much money remained after each stock purchase and in turn prove that there were sufficient separate property funds remaining in that joint account at that time to cover the payment at the time it was made. (See Marriage of Stoll (1998) 63 Cal.App.4th 837, 841; Marriage of Braud (1996) 45 Cal.App.4th 797, 823).

Under the direct tracing method, separate property funds do not lose their character as such as long as the amount of separate funds is ascertainable. (Hicks v. Hicks (1962) 211 Cal.App.2d 144; In Re Marriage of Stoll (1998) 63 Cal.App.4th 837.)

In order to prevail on a direct tracing case in a potentially commingled account, the proponent must present credible evidence as to his intentions coupled with a chronology of the source of separate funds. (In Re Marriage of Mix (1975) 14 Cal.3d 604.)

At Divorce Helpline, we work to help our clients get started in the divorce process, we work as divorce mediators and we are to help navigate through difficult financial analyses, such as Tracing. Be sure to check out our next blog to review how this applies to our example with inherited property.

Tracing Separate Property in Family Law Actions

I recently resolved a case where my client inherited money, deposited it into a community account, and then subsequently purchased stock (which subsequently became very valuable stock).  She claimed that the stock was purchased with her inheritance money. Her husband claimed it was purchased with community money.

Determining whether the stock was community property (i.e., owned by the “community,” the partnership of husband and wife) or my client’s separate property required what is called “Tracing.”  “Tracing” is a test imposed by the court to determine, among other things whether a party can show that their separate property (usually money) has survived after being moved about, and sometimes when assets have been purchased out of accounts in which separate monies have been deposited.

There are generally two types of Tracing:  “Direct Tracing” and “Family Expense” or “Recapitulation” Tracing.

In our next Divorce Helpline blog post we will take a look at Direct Tracing and in the following blog we will review how this applies to our example. In future blogs we will examine Family Expense Tracing, and one of the big traps a spouse can fall into related to Tracing.

The Trap That May Be Hiding In Your Declaration of Disclosure

You may or may not be aware that, in California, prior to signing any partial or complete Judgment of Dissolution, each spouse must serve upon the other a set of documents called a Declaration of Disclosure.

A Declaration of Disclosure is comprised of a Schedule of Assets and Debts (a recitation of all of the assets and debts owned in part or whole by both spouses, including a designation of those assets and debts as community, separate, or mixed-character property, and a value for those assets and debts, and documents attached which support these data points), an Income and Expense Declaration (a recitation of your income over the last twelve months and last month from any source, and details of your expenses, whether actual or proposed, and documents which support this data), and a statement submitted under penalty of perjury concerning your assets, debts, and investment opportunities.

The trap that is potentially lurking in your Declaration of Disclosure is the possibility of under-valuing a high-value asset. If you are taking an asset in the overall division of property, it is important that the estimate of value in your disclosure be accurate, or at least conservatively high.  The reason for this:  if you undervalue an asset that you take in the division of property, it is exceedingly easy in the year after the entry of your Judgment for your spouse to set aside (legally challenge) your stipulated Judgment on the grounds of mistake.  The basis for the set-aside boils down to “I never would have agreed to that deal had I known the pension was worth $X.”

This holds true in the first year after the entry of your Judgment even if you spouse could have investigated and discovered the correct value of the asset, but failed to do so (see Marriage of Brewer & Federici (2001) 93 Cal.App.4th 1334, 1345, 113 Cal.Rptr.2d 849, which held that each party had an affirmative duty to find out information for purposes of disclosure independent of the other’s duty to find out information to protect him or herself. It held that the party who was in the “superior position” to obtain the information “must acquire and disclose such information to the other spouse” and that the other party had no legal duty to value the plans himself.”)

A danger of an innocent under-valuation truly arises for those assets whose value is not easily verified-primarily this is real estate, defined benefit plans (plans that pay out a monthly benefit based on, among other things, an estimate of how long you will live), and business interests.  A financial account is an easy asset to value-you merely print out the most recent statement.  Real property requires more effort-a comparative market analysis or an appraisal.  Defined benefit plans require an assessment by an actuarial accountant.  A business requires a business evaluation.  If you decide to not have valuations done but guess at value, at least guess high-there is no penalty for over-estimating value, just for under-estimating value.

At Divorce Helpline, we have decades of experience in helping our clients understand and comply with their disclosure duties, which in turn allows us to work together to create strong and legally-defensible divorce Judgments.

Fiduciary Duties Between Spouses Part Two: Actions That Require A Spouses’ Prior Permission

Last week we began to explore the “Fiduciary Duty” between spouses legally obligate spouses to care for each other financially with the utmost consideration and duty.

There are certain things that a spouse may not do with regard to the community property without prior permission–it is important that couples be aware of these issues because it is often the case that one spouse is given (or takes) the responsibility of managing assets or finances, and this can sometimes lead to even an inadvertent violation of fiduciary duty.

The first two types of property that can be problematic are non-real property sales or gifts, and real property sales or gifts. A more complicated set of rules govern business (we’ll get into business interests next week).

  1. A spouse may not make a gift of community personal property, or dispose of community personal property for less than fair and reasonable value, without the written consent of the other spouse.

This rule does not apply to gifts (or things sold for less than fair and reasonable value) when this property is mutually given by both spouses to third parties.

It also does not apply to gifts (or things sold for less than fair and reasonable value) given by one spouse to the other spouse.

In other words, if you want to give your brother a “deal” on a community property asset, you better get your spouse’s consent in writing.

  1. A spouse may not sell, convey, or encumber community personal property used as the family dwelling, or the furniture, furnishings, or fittings of the home, or the clothing or wearing apparel of the other spouse or minor children which is community personal property, without the written consent of the other spouse.

Here, let’s focus on real property. Along with the other assets detailed in 2., one spouse may not sell community property real property, [i] even at fair market value [i] without prior written consent of the other spouse.

If you think the writing requirements are burdensome based on your understanding of your spouse’s character, keep in mind the unfortunate fact that sometimes these actions are brought by a spouse’s heirs after the spouse has passed, or by conservators or guardians if the spouse had become incapacitated.

A common mistake is also to “pre-adjudicate” what is or is not or could be community property (“this doesn’t apply to me because my husband and I know that house X is my inheritance . . .”) Attitudes and opinions change, and there are many non-obvious ways an asset which looks to be separate property can take on a community character. A good rule: unless have a written, technically-sufficient writing from your spouse indicating that an asset is your separate property, then it is prudent to obtain written consent for the above-referenced sales.

At Divorce Helpline we routinely work with married and divorcing clients in mediation and coaching to help them navigate the rules governing their fiduciary duties to each other.

Next week we will address the application of fiduciary duties to business interests.

Fiduciary Duties Between Spouses: Legal Landmines in Litigation and in Mediation

A fiduciary is a person who holds a legal relationship of trust between himself or herself and another person.  In California, a “Fiduciary Duty” in a Family Law context means that spouses, because they are married, are legally obligated to care for each financially with the utmost care and consideration.  They “owe” each other a duty of care that is far, far higher than they would owe a stranger, or even another family member.  It has been likened to the level of care a nanny should provide an infant child!

This means that, in California, one spouse can be sued by the other spouse if they fail, even unintentionally, to meet their obligations under this heightened duty.

The possibility of Fiduciary Duty violations is often overlooked in Family Law cases by spouses, attorneys and even judges.  The media stereotype would have you believe that tricks, ruthless behavior, “scorched earth” tactics, etc. are a common part of a divorce litigation.  Worse, many divorce attorneys engage in these behaviors on behalf of their clients, not knowing or not caring that this conduct can open their client to suits for damages and mandatory attorney’s fees.

In California this fiduciary duty can continue for many years after a Judgment of Dissolution is entered:  fiduciary duties continue until the final division and distribution of the community property.

The remedies provided by the Family Code for violations of fiduciary duty can be draconian, even if you had the best of intentions and your violation was accidental.  In future blog posts, I will explore these duties, and the penalties for violating them.

At Divorce Helpline, we can help you understand your and your spouse’s fiduciary duty under California law, and work with you, in mediation, or with our coaching service, to avoid any accidental violation of your fiduciary duty to your spouse.

The Vocational Evaluation: A Useful Tool in Mediations as Well as Litigation

In determining spousal support, both payor and payee are entitled to have spousal support calculated based on what each party COULD earn (considering their skills and training and work history), as opposed to what they actually earn.

It is not uncommon, both in divorce litigation and during divorce mediations, for the parties in a spousal support negotiation to have concerns that either the payee or the payor is not earning as much income as they are capable of earning, e.g., because of career choices, failure to work a full-time schedule, etc.

In dissolution proceedings, to investigate these concerns a court may order a party to submit to an examination by a vocational training counselor. Fam C §4331(a).

A “vocational training counselor” is an individual with sufficient knowledge, skill, experience, training, or education in interviewing, administering and interpreting tests for analysis of marketable skills, formulating career goals, planning courses of training and study, and assessing the job market. Fam C §4331(d).

A Vocational Expert is commonly used in Divorce Litigation to obtain an opinion about a party’s current ability and opportunity to earn. They can also be very helpful during mediations when used in a cooperative fashion by spouses to address a spouse’s concerns about the earning ability of the other party.

Divorce Helpline routinely works with well-known Vocational Experts in mediations where the clients wish to address the issue of Earning Ability.

Future blogs will address using a Vocational Expert to lay out a roadmap showing a supported spouse how to comply with their obligations to become self-supporting within a reasonable period of time (their “Gavron” obligation).

New Family Code Section Reopens Post-judgment Discovery in Family Law Proceedings

Last year the Family Law world was thrown for a loop–new legal authority in the form of a court case (Marriage of Boblitt) found that unless there was an agreement from the opposing side or a court order allowing the reopening of discovery, there was no right to post-judgment discovery.

“Discovery” is the ability to force production of documents, answers to questions, etc. to both explore legal claims and to prove them. In Family Law, many issues survive a trial or a mutually-agreeable Judgment: e.g., spousal support, child custody, child support, enforcement of property divisions, orders relating to pensions, etc. In most cases to effectively assess or litigate these issues “discovery” is a must.

In my opinion, the Boblitt case threw up an unreasonable obstacle to post-Judgment discovery, as it is often difficult to obtain the opposing party’s consent to reopen discovery, and expensive and time consuming (as well as uncertain as to the result) to obtain the court’s approval.

Fortunately, effective January 1, 2015, Governor Jerry Brown signed into law emergency legislation which introduced a new Family Code Section, Section 218.

Under the newly enacted Family Code Section 218, discovery will reopen automatically upon the filing of a post-judgment motion as to the issues raised in that motion.

Exactly how this new Family Code section will be interpreted by the Courts and its overall effect on post-judgment family law matters remains to be seen. At Divorce Helpline, our consultants and mediators can help you navigate the complexities of discovery, and help you obtain the documents and information you need to successfully mediate, or litigate, your case.