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.

The Basic Elements of a Custody Evaluation in California

As we continue to discuss the Child Custody Evaluation, it is important to discuss the impact of the Child Custody Evaluation on your family life, and conversely the impact your family life can have on the ongoing Child Custody Evaluation.

Basic Elements of the Evaluation

An evaluation involves collecting, managing, and analyzing a large quantity of information about the family. A private professional will often spend at least 25 to 50 hours on interviews, testing, and other data collection, spread out over a long period of time, before writing the report and formulating the final recommendations.

While each evaluator has an individual method, procedure, and style, all evaluations usually include a number of basic elements. The basic elements of a Child Custody Evaluation include the following:

  • Individual interviews of each parent;
  • Interviews of each child;
  • Interviews of each child with each parent;
  • Home visit to each parent’s home;
  • Review of various documents submitted by counsel and each parent;
  • Interviews of collateral contacts in the community proposed by each parent or as requested by the evaluator; and
  • Psychological testing of parents and children.

Your Ongoing Family Life Influences Case Throughout Evaluation Process

The evaluation is a study of the family, focused both on past history and relationships and the ongoing lives of the parents and children over a period of several weeks or months. See Fam C §§3110-3118.

Often events that occur during the evaluation become material for the evaluator’s investigation, and guidance from an attorney or other involved professionals (such as your therapist) will help handle the situation appropriately.

You Will Be Placed Under Intense Scrutiny for a Prolonged Time Period

A Child Custody Evaluation can frequently take up to 6 months from the time the evaluator is formally appointed until the report is issued. During that time, you will be placed under intense scrutiny and held to the standard of good parenting. You may feel this standard is too high or unreasonable when others in the community who are not involved in a custody case may parent their children in questionable ways without consequence. You will be experiencing life under a microscope and must understand the importance of exercising good judgment at all times despite the intrusion of the evaluation in his or her family’s life.

At Divorce Helpline we can coach you through the intricasies of the Child Custody Evaluation. We also work with well-known California Child Custody Evaluators and routinely arrange and manage friendly Child Custody Evaluations for our Divorce Helpline clients who would benefit from the process.

Custody Evaluations : A Common, But Expensive Tool, in Custody Litigation

A child custody evaluation is a structured investigation of parents and children by a mental health professional, resulting in a written report about the family and recommendations for a custody and parenting plan as part of a divorce.

(Fam C §§3110-3118; Cal Rules of Ct 5.210(c)(2)). Judges order evaluations to obtain a neutral mental health professional’s assessment of the family, each parent’s capacity to parent, and the children’s needs and capabilities.

“Child Custody Evaluations” are occurring more and more frequently in recent years in Family Court proceedings and even mediations. They have evolved as a legal and psychological tool: where in prior years they were primarily ordered by a court in high conflict custody cases, now they are also commenced by friendly agreement of parents who want a comprehensive child custody expert’s opinion on the parenting plan in the best interest of their children.

There is no process more critical to the custody case than the custody evaluation. Judges usually rely heavily on the evaluator’s opinions and often adopt the evaluator’s recommendations with few or no changes.

Although a trial following the evaluation may sometimes result in a wholesale shift from the evaluator’s recommendations, more often than not it will modify the recommendations in certain respects but not reject them outright.

In a subsequent blog post I will be talking about different aspects of child custody evaluations, their costs, pitfalls, and advantages.

Finalize Your Divorce in 2015

Filing Deadline is June 30, 2015

The minimum amount of time it takes for a divorce to finalize a divorce in California is six months from the date that the Petition is served on the Respondent. Serving the Petition gives formal legal notice to your spouse that your divorce papers have been filed with the court. If you wish to be divorced by the end of this year, you will need to have completed this step by June 30, 2015.

You will have to have met the residency requirements, which require one of you to have lived in California for at least six months. You also need to have lived for at least three months in the county where you are filing for divorce.

For tax reasons, the June 30th deadline is very important to many people. Your tax filing status is determined primarily by your marital status on the last day of the tax year, December 31. Being able to file as “single” or “head of household” may save you money in state or federal taxes. You can learn more about tax implications of your marital status in this article.

In other instances, the divorce process may have stalled, and having a deadline with concrete implications may provide the impetus to move forward.

If you hope to finalize your divorce by the end of the year, and you have not yet filed and served your Petition on your spouse, we urge you to contact us immediately. We can help you understand the steps you need to take in order to meet the June 30 deadline. Call Divorce Helpline at 1-800-359-7004.

Are the agreements reached in mediation binding?

Will they be accepted by the court?

Attorney Hamid NaraghiYes. Once you and your spouse reach an agreement through our mediation process, we will put that agreement into the legal format that will make it acceptable to the court. This properly formatted marital settlement agreement is just as binding as one made by a family law judge.

Is using a Private Judge more expensive than going through the court system?

Attorney William E. WoodcockSurprisingly, working with a private judge to resolve your issues and finalize your divorce can be relatively inexpensive; keeping costs in the neighborhood of hundreds dollars as opposed to the thousands of dollars. It really depends on your personal situation and whether your purpose for using a private judge is to speed up the processing of your documents with the courts, or whether you need the private judge to hold hearings and trials. Please contact Divorce Helpline and we can consult with you to give specific price information.