Los Angeles Long Beach CA Metro Family Law Blog

Dividing property is always difficult during a California divorce; when a small business is involved, the stakes are even higher. Couples who generate income from a business during their marriage must comply with California community property laws.

Community property in California is defined as property, income or assets that are acquired while spouses live together. Unless a prenuptial agreement exists, community property is divided equally among separating spouses in California. In other words, any business considered community property will be owned 50 percent by one spouse and 50 percent by the other.

The valuation of the business is essential during a California divorce. California courts will accept any legitimate evidence of the value of a shared business when dividing a community estate. Unfortunately, even small businesses are valued according to multiple factors.

Perhaps the most difficult aspect of valuing business property is the concept of "goodwill" in California. Basically, goodwill refers to the potential for profit of any business entity. Since this part of the property is intangible, it must be valued based on supposition and precedent. Business goodwill is used in valuing a business not just for divorce cases, but also if the business is sold to a buyer.

A business does not carry more weight than an investment or a residential property in California. If one spouse wants to take over the business, for example, the other might get the residence, the cars, the stock portfolio and other assets, so long as both sides are equal. During a California divorce, the courts will examine all evidence of community property and make decisions based on the value of each asset. California courts will consider the value of the business as of the date on which a couple separates, though this can vary depending on circumstances.

This is why it is a good idea for family business owners in California to draw up agreements in the case of separation. It might not be a comfortable topic for couples, but it does reduce some of the complications should a divorce take place. An attorney can help spouses draw up an agreement that will cover dispensation of community property.

Every year around tax time, parents across the country are faced with questions about the taxation and/or deductibility of child support payments made or received over the past year. When child support payments are relatively low compared to the income of the person making the payments, this may not seem like a significant factor to consider - but it's important to understand the tax consequences to avoid running into problems with the IRS.

California, like every other state, is held to the dictates of the Internal Revenue Service when determining federal tax consequences of support payments. Essentially, according to IRS Publication 504, for taxation purposes, child support payments are fiscally neutral - they are not deductible by the payer, nor are they considered to be income to the recipient.

In fact, the IRS specifically mandates that child support not be included in a calculation of gross income to determine if a tax return filing is necessary. These regulations are equally applicable to parents at the highest and lowest income levels.

Child support payments are obviously intended for just that - the support of the child, including medical, legal, personal and educational needs. The apparent intention of the IRS in enacting such regulations is to encourage the payment of adequate child support. If the recipient of the support, presumably the custodial parent, were to be required to claim the payments as income, it may have a chilling effect on the willingness of a parent to accept the money, thus resulting in detrimental effects on the child.

Of course, the calculation of child support amounts can be difficult, and it may be possible for the parents to arrange for a payment amount that protects both the child's interests and their own. Should you have any questions about the effects of child support on taxable income or any related issues, the advice of a family law attorney well-versed in these topics can be invaluable.

The Internal Revenue Code is, to say the least, challenging. At time it seems impossible to comply with the countless, nuanced provisions of tax law. Most people with complicated financial lives turn to the advice of experts when filing taxes to avoid running afoul of these laws.

Tax season is not the only time you should turn to professionals, though. It's important to understand the long-term tax consequences of your legal decisions before you establish binding agreements. For example, you should consult with a lawyer when establishing spousal support or alimony payments as part of a divorce settlement, to ensure that all of your interests are protected.

The IRS provides specific guidance on the taxation of spousal support. Essentially, providing that certain criteria are met, alimony payments are taxable to the receiving spouse (payments must be included in the calculation of gross income), and deductible by the paying spouse (payments can be subtracted from pre-tax gross income).

There are conditions that must be met, however. For example, in order to be considered alimony for tax purposes:

• The payments must be made by cash, check, money order, etc.
• The instrument of payment cannot designate the payments as not includible in gross income of the recipient or deductible by the payor
• The spouses cannot be members of same household
• The spouses cannot file a joint return

Spousal support is not mandated by California law, but it is regularly included in divorce decrees. Whether court-ordered or negotiated by the parties themselves, the implications of alimony payments can be huge.

Should you have any questions about the effects of spousal support on taxable income or any related issues pertaining to the support, the advice of an attorney well-versed in these topics can be invaluable.

On December 24, 2009, David Goldman was reunited with his son Sean after a bitter five-year custody battle with his ex-wife, Bruna Bianchi. Though ultimately successful, Goldman's case illustrates some of the difficulties parents in the United States face when involved in cross-border custody disputes.

The Goldman family was living in New Jersey when Bianchi took Sean to her native Brazil for what was supposed to be a two-week vacation. Instead, Bianchi filed for divorce upon her arrival and received an order from a Brazilian court granting her sole custody of Sean. Goldman soon sought and received an order granting him sole custody from a New Jersey court, thus setting the stage for a legal battle that would draw extensive media coverage and attention from political circles, including President Barack Obama and Secretary of State Hillary Rodham Clinton.

At issue in the Goldman case was the application of the Hague Convention on the Civil Aspects of International Child Abduction, which provides a method for the expeditious return of children taken from one member nation to another. Both the United States and Brazil signed and ratified the Convention, which allows a child's "habitual residence" - usually the country where the child lived prior to abduction - to decide matters of child custody. Most importantly, the Convention provides for the swift return of the child to his or her country of habitual residence when a parent submits a proper petition under the treaty.

No one enters a marriage thinking it will fail. Unfortunately, however, many marriages do not work out. As unnecessary as it may seem to consider a prenuptial agreement, couples should always work to ensure the safety of their assets in the event of a divorce.

Prenuptial agreements are not selfish reservations of property, but rather an opportunity for couples to develop a detailed plan for their future, financial and otherwise. For example, a properly drafted prenuptial agreement can help ensure that children from a previous marriage are provided for, or that family heirlooms remain in a spouse's family, regardless of what may happen in the marriage.