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IRAs grow in importance in property division

As the tax laws change regarding alimony for divorces concluded in 2019 or later, many people are looking toward individual retirement accounts as a way to create fair settlements that preserve tax benefits for both parties. When the shifting of the tax burden for alimony goes into practice, the current environment that encourages generous support payments through a valuable tax deduction will change considerably. However, both parties will still be looking for a solution that provides a measure of tax protection for the paying former spouse while providing needed funds to the recipient.

The division oof IRAs is one way to accomplish this goal, especially as they can be divided tax-free. Of course, the division of retirement funds is nothing new in a divorce. In many cases, retirement accounts are among the largest assets that a couple has, especially when the couple involved has been married for some time. These valuable investment accounts can be a major part of a wealthy couple's asset portfolio. However, in most cases, individually owned IRAs are the ones involved in a divorce, and they are split according to a court order.

Keeping the home after a divorce becomes more expensive in 2019

For many California couples, considering getting a divorce may be a major step towards the realization that their marriage is about to end. While former couples should never rush to divorce unless there is violence or abuse in the marriage, waiting to get a divorce finalized in 2019 versus 2018 could have an impact on the former couple's finances, especially if one person wants to keep the family home.

Although not all former couples decide to keep the family home, a person may want to hold on to this asset especially if the former couple has children. Keeping the home potentially means that the children do not have to change school systems and that their transition from one family unit to two family units may be a bit easier. Under the 2018 tax laws, the person who kept the family home was able to deduct a certain amount of the property taxes and a certain amount of the interest on the mortgage.

How to leverage a home to create financial security

A divorce can leave California residents with legal bills and children to raise on a single income. However, it can also provide a person with a significant asset in the form of the marital home. In many cases, a custodial parent will keep the home to provide stability for any children a couple had while married. Every time a mortgage payment is made, a homeowner increases his or her equity in that asset.

Equity can be used to get a loan or to get a reverse mortgage. However, it is important to consider the costs of keeping the family home in addition to the mortgage prior to agreeing to keep it. Those costs include property taxes, insurance and paying for any maintenance work that needs to be done. Ideally, a person will only keep the home if he or she can afford to live in it for five years.

How to provide for children while unemployed

When a noncustodial parent loses his or her job, it doesn't mean that he or she isn't responsible for providing for his or her child. Instead, it means work with the custodial parent and the family court to create a solution that serves the best interest of the child. Family courts in California and other states may monitor the progress that the unemployed parent is making finding a new job.

It is also a good idea for unemployed parents to see if they are eligible for unemployment benefits. If they are, child support payments can be deducted directly from any benefit check the noncustodial parent receives. Those who aren't able to get benefits may be able to postpone their child support obligations while looking for a job. However, once new employment is found, a parent is generally required to make up for back support owed.

Handling college expenses while navigating a divorce

For California families, planning for a child's higher education can be a major priority, especially given the importance of a university degree for future success in many professions. However, the costs of college are rising continuously and may put the expenses nearly out of reach for many families. The College Board estimates that tuition costs rise around 3 percent annually; in order to provide for a child's education, it can be important to put a plan into effect long before a child considers their future educational plans. However, a divorce can add extra complications and difficulties to the already-onerous task of saving for college.

During a divorce, all marital assets are divided during the process. When a court order is issued, payments like child support for minors and spousal support are generally prioritized over higher education expenses. However, parents who have planned to provide support for their children's education can include a plan for those expenses as a part of their divorce settlement. During the divorce negotiations, it can also be particularly important to address family assets that are already earmarked for educational costs.

Parents who default on child support can often not afford it

California parents who do not have primary physical custody of their children are usually required to pay a certain amount in child support every month. However, there are many who simply cannot afford to pay what they owe, potentially causing them to default and face severe legal consequences.

According to a study by the Urban Institute, 70 percent of the total child support that is owed comes from parents who either have no reported income or those who make less than $10,000 a year. While parents can go to court and show proof of their income, those who make less than $10,000 a year may not have the finances to afford legal counsel. As such, they may not even be aware that they can go to court and request that their child support be reduced.

bird nesting

Hollywood, the famous neighborhood in Los Angeles, California, may be known for several things, films and movie stars to name a few, but it is currently responsible for spreading a trend among recent divorcees: bird nesting. Bird nesting is when a recently divorced couple agrees to share a common dwelling by alternating living in it with their children. The children remain in the home, while the parents move in and out according with their visitation schedule

Naturally, bird nesting has several benefits that make it appealing. For one, it allows time to pass, especially if couples need to run out the clock due to a devalued property or a lease that's about to expire. Additionally, it gives the separated pair time to settle into the divorce and disentangle themselves from one another. However, the biggest benefit is that it helps the children ease into the divorce, without upsetting their world too much.

Parents can support their children through divorce

While divorce can be hard on spouses, it can be even more difficult for children. In many cases, however, both parents can agree that caring for their children is the most important task. Even in cases where the relationship is more contentious, many divorcing parents in California work hard to keep their children from being exposed to marital strife or issues with divorce negotiations.

There are many ways that divorcing parents can help their children feel supported and safe. For example, encouraging a child's interests and activities can help them to feel like their own goals are important. It can also be important for parents to check in with other significant figures in a child's life, such as teachers or coaches, to see how the divorce is affecting the kids.

Child support collection efforts intensify

Unpaid child support can impose a severe burden on many single parents and their families in California. Court-ordered child support is meant to help cover the daily costs of raising a child, and when it is delinquent, parents may find it next to impossible to make ends meet. Child support funds can pay important costs for the children, including medical and dental costs, educational fees and other expenses. Because unpaid child support can have a major impact on children's health and well-being, enforcement of support orders is a priority for both state and federal agencies.

One of the most effective mechanisms of collecting delinquent support and enforcing ongoing collection is the use of wage garnishment and payroll deductions at a parent's place of work. Though child support matters are generally handled as part of state law, the federal Office of Child Support Enforcement, or OCSE, works to improve communication and processes across the country. Through fiscal year 2016, the OCSE collected $33 billion in child support across the country, and around three-fourths of those funds came in through direct payroll withholdings.

Errors to avoid when dividing a retirement account

For some couples in California, a retirement account could be their largest asset. Therefore, dividing the account in a divorce could be quite contentious. In a 2016 survey, the American Academy of Matrimonial Lawyers found that separating retirement accounts was the second most common cause of conflict in a divorce.

Couples dividing a retirement account must take steps to avoid taxes, penalties and unfair distribution. One common error is to write out the amounts in dollars instead of percentages in the divorce agreement. This fails to account for the possibility that the value of the account might fluctuate. A person who expects to receive a distribution from the retirement account should wait until after the divorce to agree to being removed as a beneficiary on the account. Otherwise, if the account holder dies before the divorce is final, the spouse may receive nothing.

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