California law can be surprisingly picky when it comes to determining the issues that can and cannot be predetermined in a marital agreement, particularly a postnuptial agreement. So, can spouses establish an agreement specifying that they will not seek alimony during or after a divorce? The answer depends on the circumstances surrounding the creation of the agreement and at the time of divorce.

Did the Spouse Waiving Alimony Receive Advice from Independent Legal Counsel?

Generally, two people can create a prenuptial agreement without the advice or assistance of an attorney. However, Section 1612 of the California Family Code specifies that provisions regarding spousal support—the official term for alimony—are not enforceable if the person who stands to lose from that provision was not represented by independent counsel at the time the agreement was signed. In other words, if the spouse who waived alimony in the agreement did not have their own attorney at the time of signing, then their waiver of alimony is not legally valid.

So, the first step to enable a spouse to waive alimony in pre or postnuptial agreement is to ensure that that spouse has advice from an independent attorney who is not also representing the other spouse.

Is the Alimony Provision in the Prenuptial Agreement Unconscionable as Applied?

The statutory section that requires a spouse to receive independent legal advice before waiving alimony also specifies that a waiver would not be enforceable if it “is unconscionable at the time of enforcement.” What does that mean?

The term “unconscionable” is a somewhat vague yet common legal standard courts use to set aside agreements or change outcomes that a judge finds to be grossly unfair. Sometimes, they describe something as unconscionable if it would “shock the conscience.” Essentially, the court will not uphold something the judge considers to be so unfair that it is simply wrong.

What makes a prenuptial agreement regarding alimony grossly unfair? That would depend on the circumstances presented. In one case, a prenuptial agreement provision that limited a spouse to $6,000 in alimony per month was invalidated as unconscionable. That was based on the fact that at the time of the divorce, the couple enjoyed a lifestyle that would have cost $37,000 a month for that spouse to maintain, and they also had six children. Had the couple enjoyed a more modest lifestyle, an agreement limiting alimony to $6,000 per month might have been considered reasonable, or at least not so unfair as to be invalidated.

With this in mind, even if a spouse is represented by independent counsel, the circumstances at the time of the divorce will determine whether a waiver of alimony will be accepted by the court.

Is the Agreement Enforceable?

For any provision in a prenuptial agreement to be enforceable, the agreement itself must be valid. It must be property signed and notarized, and both parties must have signed voluntarily and not under coercion. In addition, each party must have provided the other with full disclosure of their financial situation, including debts or they must have waived their right to disclosure in writing.

The law specifies that a premarital agreement will only be considered to have been executed voluntarily if the party against whom it is being enforced was represented by an attorney or expressly waived the right to legal counsel. Again, the law places great emphasis on the need for legal advice so that parties understand the rights they are potentially compromising in a prenuptial agreement. Moreover, the law also requires a party to be given at least seven days to consider the terms of the final agreement before signing.

Postnuptial Agreements

When a couple enters into a postnuptial agreement, they are altering the rights and obligations that have already been created by virtue of the marriage. Instead of affecting potential future rights, like a prenuptial agreement, the postnuptial agreement impacts existing rights. For that reason, courts scrutinize these agreements far more closely.

The court may consider waiver of alimony in a postnuptial agreement to be unfair, particularly if one spouse stayed out of the workforce to focus on the home. Courts will also look carefully for any signs of coercion.

Experienced Legal Guidance Helps You Achieve Your Goals for Alimony and Marital Agreements

The bottom line is that while it is possible to waive alimony in a prenuptial or postnuptial agreement, it can be difficult to enforce a waiver. When you are creating a marital agreement, great care must be taken to follow every requirement and establish terms that are not likely to be viewed as grossly unfair with respect to spousal support.

If you are interested in creating an agreement regarding alimony or you are concerned with the enforceability of a waiver already in existence, you can trust the experienced team at Holstrom, Block & Parke, APLC to protect your interests. Our Certified Family Law Specialists and associates are available to answer your questions—just schedule a consultation to get started.

For years, people got used to the idea that alimony was taxable as income and created a tax deduction for the spouse making payments. Then a few years ago, the federal laws changed. But what about California laws? And what about alimony agreements established before the tax laws changed?

State laws differ from federal laws in the way alimony is treated for tax purposes. So here we describe the basics on taxation of alimony in California. If you are creating a plan for alimony as part of a divorce or separation, it is wise to keep tax consequences in mind. The experienced team at Holstrom, Block & Parke, APLC can help ensure that you understand tax implications of your situation and help develop a plan that provides a fair allocation of obligations keeping the current tax factors in mind.

Federal Tax Treatment of Alimony

January 2019 was the start of the new rules for taxation of alimony at the federal level. If you are paying or receiving alimony based on a separation agreement or divorce decree executed before 2019, then you continue under the previous rules, meaning that if you receive alimony, it is generally treated as taxable income, and if you pay alimony, it is generally counted as a tax deduction. You can claim this deduction even if you take the standard deduction and do not itemize other deductions.

For alimony paid under the terms of an agreement executed in 2019 or later, alimony is not included in the federal gross income of the recipient and it is not tax deductible for the spouse or partner making payments. Moreover, if you were divorced before 2019 but you modified your divorce or separation agreement in 2019 or later, and your decree includes language indicating that the repeal for the deduction of alimony payments applies to your modification, then the new federal tax treatment applies to your situation as well.

Alimony for Purposes of California Income Tax

The Franchise Tax Board for the State of California does not follow the new federal rules when it comes to alimony. This can make it challenging to calculate state taxes because you may need to adjust your gross income, a figure used to calculate many state tax obligations.

For California income tax, just as with federal income tax for divorce agreements entered into prior to 2019, anyone receiving alimony payments needs to report those payments as income on their state tax return. Those paying alimony to a former spouse or registered domestic partner may be allowed to deduct the payments from income on their California returns.

For purposes of filing state returns in California, if alimony is paid under the terms of a pre-2019 agreement, then tax treatment is consistent with federal treatment, and the income and deductions will be included in the federal adjusted gross income. For alimony paid under the terms set or modified in 2019 or later, California taxpayers will need to make adjustments in Schedule CA to account for alimony payments, either as additional income for recipients or as a deduction for payors.

Account for Tax Treatment of Alimony When Developing Your Separation or Divorce Agreement

When figuring out the alimony, division of assets, and other financial matters involved in a divorce, it is crucial to take tax implications into account. Factor amounts into the calculations to help ensure that a spouse receiving alimony will have enough after taxes to provide resources to meet needs. Remember that a spouse paying support will receive a tax break on the state side of calculations at least, and this can help provide adequate resources to fulfill alimony obligations.

Not All Payments Between Former Spouses Constitute Alimony for Tax Purposes

The IRS has clear rules for determining whether payments constitute alimony. Essentially, payments that are not specifically required by a divorce order or separation agreement are not considered alimony for federal tax purposes. For instance, if a spouse makes payments voluntarily to provide support or payments that are technically part of a spouse’s community property income, those payments are not eligible for tax deductions.

Let Holstrom, Block & Parke Protect Your Interests in Divorce

With over 300 years of combined experience, the team at Holstrom, Block & Parke is ready to help calculate tax impacts and negotiate for advantageous determinations when it comes to the amount and duration of alimony. We can assist with establishing initial arrangements or seeking court orders to modify arrangements.

To learn more about the ways we can protect your interests with respect to alimony and other aspects of divorce, schedule a confidential consultation today.

Whether you are paying alimony or receiving alimony, the payments make a big impact on your life and financial situation. For the payor, sometimes the impact is too big, not leaving you enough to live on. Or for the recipient, the impact may not be big enough, leaving you short when it comes time to pay bills.

So, the logical question is whether you can modify alimony obligations in California. The answer, as with so many questions in the law, depends on the situation. We will explore the rules on alimony modification and the steps you can take to help achieve your goals for revision.

A Modification Must Be Justified

To change spousal support—which is the term California uses for alimony—you must usually demonstrate a change in circumstances that justifies the modification. However, there are not hard and fast rules describing exactly what constitutes a change that is sufficient to justify modification.

The person seeking the modification must present evidence to support the need for a modification. Courts are obligated to consider the same factors in a request for modification as they did in the original determination about whether to award spousal support. So a former partner seeking a modification could demonstrate a change in factors such as:

• Obligations and assets of each party
• The marketable skills of the party receiving support and the need for training
• Age and health
• Whether the receiving party’s ability to work is affected by the need to care for dependent children

The party seeking the modification will need to provide pay stubs or similar evidence of recent income. Payors frequently request a modification if they have lost a job or their work income is reduced in some other way. If the reduction is due to a factor within the control of the paying spouse, such as a voluntary reduction in hours or voluntarily taking a job that pays less, then the court tends to look disfavorably on the request for modification. Recipients of alimony often seek modifications to gain additional amounts if they or a child has medical problems or other additional needs that increase expenses or make it harder to earn income.

There Must Not Be a Prior Agreement Preventing Modification

One thing the court will need to confirm before modifying a spousal support order is whether the parties had established a valid agreement that prevented modification of support. That agreement could be contained in a pre- or postnuptial agreement, or as part of the order establishing alimony obligations.

Even an oral agreement specifying that alimony will not be modified is enforceable if it was made in open court.

Statutory Reasons for Modification of Spousal Support

Some of the statutes regarding spousal support specifically state that certain situations do or do not provide grounds for a modification of alimony. For instance, Section 4326 of the California Family Code states that “termination of child support pursuant to subdivision (a) of Section 3901 constitutes a change of circumstances that may be the basis for a request by either party for modification of spousal support.” (This refers to termination of child support because the child has graduated high school or reaches the age of 19.)

As another example, Section 4323 establishes a rebuttable presumption that if the party receiving support cohabits with a partner, that party has a decreased need for support. The statute continues to state that if the court determines that circumstances have indeed changed, the court can modify or terminate alimony. However, the income of the partner the supported party is living with cannot be considered in determining whether a modification of support is justified.

An experienced family law attorney can help you determine whether statutory factors provide justification for a modification of alimony in your situation.

Failure to Become Self-Supporting

Alimony in California is generally designed to last only long enough to enable the receiving spouse to become self-supporting. The general assumption is that the longer a spouse has been married and focused on supporting the home, the longer it will take them to develop earning capacity to maintain the lifestyle enjoyed during the marriage.

If a spouse does not have a condition that prevents them from working, and that spouse doesn’t do much to increase employability or look for a job, the failure to attempt to become self-supporting has been held as grounds to justify modification of spousal support. More often, the lack of effort to become self-supporting is used to justify a refusal to extend alimony, but it could also provide grounds to reduce or terminate obligations.

Working Closely with an Experienced Attorney Can Allow You to Obtain the Modification You Need

Determinations about whether and how to modify spousal support are extremely fact-specific. That means if you are seeking a modification, or you want to show why a modification is not warranted, you need to work closely with your attorney to ensure that they have the best factual information to support your goals.

At Holstom, Block & Parke, APLC, our team of Certified Family Law Specialists and associates understands the factors courts find persuasive in modification cases. Schedule a confidential consultation to learn how we can help you get the modification you need.

The popularity of crime shows makes many people automatically associate the word “forensic” with efforts to solve a murder. While the term can apply to the use of scientific methods to investigate potential crime, forensic also has a second meaning relating to the law and the court system. Forensic accounting in divorce references both meanings of the word.

If you are concerned that a spouse may be attempting to hide assets or dispute whether certain assets should be classified as one spouse’s separate property, a forensic accountant can trace assets and provide the answers you need to protect your interests. Moreover, a forensic accountant will also provide evidence in a form you can use in court. Here are some of the ways forensic accounting is used in divorce in California.

Locating Hidden Assets

A forensic accountant can analyze tax returns, financial statements, loan applications,and a host of other financial records to detect signs of hidden income or assets moved off the record. If a spouse owns a business, that provides additional opportunities to conceal money and property, so it is particularly helpful to have an experienced professional who knows where to look and how to identify discrepancies.

Forensic accountants use a variety of methods to locate and identify assets to detect different types of fraud in divorce.

Characterizing Property as Marital or Separate

In divorce, couples divide assets considered to be marital property, but each spouse keeps the assets that are determined to be their separate property.  Property that a spouse owned before marriage or received by inheritance is usually their separate property initially, but it can be commingled with marital property and become at least partially marital property.

Using forensic accounting techniques to trace property can help a spouse show what percentage of property value should be treated as separate property and not divided in divorce.

Assistance During Financial Discovery

Because forensic accountants understand legal proceedings and focus their skills on the analysis of financial documents, they can provide valuable assistance during the discovery process in divorce. Discovery is the fact-finding stage of a legal case, and skilled attorneys know that they can essentially win their case through the strategic use of discovery processes. Through financial discovery, your legal team can gain the information that puts you at an advantage in negotiation and in arguments presented in court.

Business Valuation

When one or both spouses own an interest in a closely-held business, many financial factors associated with the business will have an impact on the divorce. For instance, some or all of the value of the business may be marital property that must be divided. Forensic accounting methods can help establish an accurate value.

In addition, forensic accounting can be used to assess the value of a spouse’s contributions to the business. These determinations can allow the process of dividing marital property to proceed with more confidence all around.

Calculating Cash Flow

When determining how much income a business owner can reasonably be expected to contribute to the support of a spouse or child, it is essential to understand several elements of cash flow connected with the business. Forensic accounting can be used to calculate cash flow that can in turn be used to help establish a fair division of property, ability to provide or need for alimony, and child support obligations.

Expert Testimony in Court

Knowing information is one thing, but proving it in court is often another matter. Forensic accounting uses scientific methods to locate information and calculate conclusions, but it also uses logical chain reasoning to prepare evidence that can stand up to scrutiny in court.

A forensic accountant can prepare specific evidence to be used to demonstrate particular financial facts, but a forensic accountant can also serve as a qualified expert witness to testify to certain truths in accounting. They can explain their analysis of financial information and show why it supports legal arguments made on behalf of a client in divorce.

Holstrom, Block & Parke Understands How to Take Full Advantages of the Benefits of Forensic Accounting in Divorce

As in marriage itself, many of the most ardent arguments in divorce concern financial issues and lack of trust. Forensic accounting techniques can uncover fraud, but they can also be used to confirm the absence of fraud. In either case, use of forensic accounting protects both parties and ensures that divorce terms are fair and reasonable because they are based on accurate financial knowledge.

At Holstrom, Block & Parke, APLC, our team makes excellent use of forensic accounting methods to put our clients in the best position, whether we are negotiating divorce terms out of court or presenting our case to the judge. If you’d like to discuss the ways forensic accounting could be used in your specific situation, just schedule a confidential consultation.

Alimony—known as spousal support under California law—is a sensitive subject. Former spouses ordered to pay alimony often resent the depletion of the income they work so hard to earn. Those awarded alimony can feel unfairly pressured to make tremendous changes in a short period of time. And on top of everything else, they often have to fight to get a former spouse to honor the legal obligation to pay support.

So what happens to you if you fail to pay alimony? What options do you have if you’re supposed to receive alimony but payments are late or never made at all? It is not a unique situation, so the law provides numerous ways to address the problem. Whether you are owed missing support or facing consequences for failure to pay support, an experienced attorney can help protect your rights and help you resolve the matter quickly and effectively.

Spousal Support is a Court-Ordered Obligation

Both the person expected to pay alimony and the person who anticipates receiving support need to understand that even if they developed their own agreement about alimony, once that agreement has been incorporated in the divorce settlement, alimony becomes a court-ordered obligation. That means refusing to pay can lead to more consequences than failing to make payments owed under a contract.

That also gives the intended recipient more options for enforcement than they would have if they were enforcing a contractual obligation. However, often it will be necessary to apply to the court to seek remedies, and this can be a complicated process.

When spousal support is unpaid, interest accrues at a rate of 10%. So the debt for unpaid alimony can mount quickly unless steps are taken to reduce legal obligations.

The Logistics of Alimony

When the spouse who is obligated to pay alimony has a traditional job with a regular employer, the court will often include an earnings assignment order which tells an employer to deduct support payments from the employee’s pay automatically. This is often called wage garnishment.

If an earnings assignment is in place and payments are missing, it might be necessary to check with the employer to see if there has been an administrative mistake. If you receive child support as well as alimony, the employer will send money to the California State Disbursement Unit who is then supposed to send it to you. It may be helpful to follow up with the agency to ensure they have the correct information for you.

A former spouse can agree to accept payments directly instead of through wage garnishment. It is often a good idea to request earnings assignment from the court regardless but to ask the court to stay the assignment, effectively putting it on hold. Then, if the spouse stops paying, it is then very easy to ask the court to end the stay so the assignment order will be sent to the employer.

If there is no earnings assignment, it may be possible to request one if the spouse has a regular employer. When a paying spouse is behind on payments, the receiving spouse can ask the court to adjust the earnings assignment to include past due amounts along with interest.

Options for Enforcement of Alimony Obligations

When alimony payments aren’t fulfilled through wage garnishment/earnings assignment, then a spouse who is supposed to be receiving payments can ask the court to enforce the obligations in other ways. This might include:

• Intercepting tax refunds
• Using a bank levy to remove funds from the supporting spouse’s bank account
• Holding a spouse in contempt of court, which can lead to jail time

However, it is often more effective to start with negotiations through an attorney. Knowing that you have the power to take serious legal action can often be persuasive for a spouse who has been withholding payments out of pride or reluctance. If the payments aren’t being made because your former spouse lost their job and has no money, then putting them in jail for contempt will not help you gain support payments. Instead, you might negotiate an extended schedule for repayment. If you plan to make changes in the alimony obligations going forward, it is important to obtain court approval of the change because the original order will remain legally binding until it expires or is replaced by a new order.

Get Experienced Assistance with Alimony in California

When there is a problem with alimony, it is best to address the issue as soon as possible. The longer obligations go unmet, the more difficult it will be to make up the missed payments, and this can be a problem for both the paying spouse and the intended recipient.

The dedicated team at Holstrom, Block & Parke APLC has over 300 years of combined experience helping clients overcome challenges during and after divorce. Contact us for a confidential discussion of the ways we can work to resolve your difficulties with alimony.

Change is a constant in life. Circumstances evolve, and what worked yesterday may not be suitable today. Recognizing this, California law allows for the modification of child custody, support, or alimony orders to adapt to changing circumstances.

At Holstrom, Block & Parke, APLC, we understand the intricacies involved in this process and are here to assist whether you want to ask the court for a change or demonstrate why the current arrangements continue to meet the best needs of the family and should not be modified.

Requesting a Modification

If you find yourself needing changes, the first step is to file a petition with the court that issued the original order. We can help you gather the required evidence to support your case, and present your arguments persuasively to help achieve your goals.

Of course, our team will manage the necessary paperwork and representation in court to facilitate a smooth transition. We focus on minimizing stress and strategizing to navigate the legal processes efficiently and effectively.

When Can You Seek a Modification?

In California, you can request changes in custody, support, or alimony orders when there is a significant change in circumstances. This could be a job loss, relocation, changes in the child’s needs, or any other substantial change that affects the parties involved.

It's important to note that modifications can be requested no only when circumstances change for the worse but also when a parent or former spouse enjoys improved living conditions. For instance, if the parent paying child support gets a big raise, the parent receiving support could ask for an increase to allow the child a share in the improved family circumstances. Or if a former spouse moves in with a new partner and reduces their living expenses, that can justify reducing or eliminating alimony.

Factors California Courts Consider in Modification Cases

California courts assess several factors when evaluating modification requests. They focus on the best interest of the child in custody cases, considering elements such as the child’s age, health, and the ability of the parents to meet the child's needs. For support and alimony modifications, the courts look at the financial ability of both parties, among other factors. We can help you understand what factors will be considered in your specific situation.

Our experienced team can guide you in understanding the nuances of the court's considerations, helping to prepare a robust case that adequately addresses all the necessary legal aspects while always prioritizing the welfare of the child or the fairness of the support being provided.

The Role of a California Divorce Lawyer in Modification Processes

Having an experienced divorce lawyer by your side can be immensely beneficial throughout the modification process. We can help present your case persuasively, highlighting the crucial factors that justify the modification. Our team works to ensure that the modification serves your best interest and that of your child.

Whether it’s understanding how long the process takes or what you need to prove for the modification to be granted, we’ve got you covered. Feel free to reach out with your questions. We can also offer guidance on how to manage your affairs during the interim period while the modification is pending. This includes advice on adhering to the existing orders until the new modification is officially granted, to avoid any legal complications.

What to Expect After Filing for Modification

After filing your modification request in California, expect some waiting time before the court reviews your case. The other party will be notified and given a chance to respond.

It’s essential to be prepared for court hearings, but we will guide you through the process, offering representation grounded in experience and understanding of California laws. It's crucial to remain patient and maintain open communication with your legal team during this period.

Keeping Records for Your California Modification Case

Being proactive in keeping detailed records can significantly bolster your case. Document any changes in circumstances meticulously, including financial alterations, to present a strong case in court. We recommend that you consult with us early in the process, so we can advise you on the best way to keep records that will support your case.

Contact Holstrom, Block & Parke, APLC for Help With Modifications

The process of requesting a modification or trying to stop a proposed modification can be daunting, but with the right legal representation, you can move forward with confidence. At Holstrom, Block & Parke APLC, we have the experience to present your best case to the court and argue effectively to reach your desired outcome.

To get started, call us today at (855) 426-9111 or contact us online to schedule a consultation with a family law attorney in Southern California.