TLD's General Counsel Blog

Do Not Overlook Declarations of Disclosure

After or concurrently with service of the petition for dissolution or nullity of marriage or legal separation of the parties, each party shall serve on the other party a preliminary declaration of disclosure, executed under penalty of perjury on a form prescribed by the Judicial Council. The commission of perjury on the preliminary declaration of disclosure may be grounds for setting aside the judgment, or any part or parts thereof, pursuant to Chapter 10 (commencing with Section 2120), in addition to any and all other remedies, civil or criminal, that otherwise are available under law for the commission of perjury. Unless the parties have stipulated to a mutual waiver of the final declarations of disclosure (see below), the preliminary declarations of disclosure are essentially only a general “inventory” of the parties' respective assets and liabilities. Unlike the final disclosure declarations, characterization and valuation details are not required.

Specifically, each party's preliminary declaration of disclosure “shall set forth with sufficient particularity, which a person of reasonable and ordinary intelligence can ascertain,” the following information (Fam.C. § 2104(c)):

• The identity of all assets in which the declarant has or may have an interest and all liabilities for which the declarant is or may be liable ... regardless of the characterization of the asset or liability as community, quasi-community or separate. [Fam.C. § 2104(c)(1)]

• The declarant's percentage of ownership in each asset and percentage of obligation for each liability where property is not solely owned by one or both parties to the action. [Fam.C. § 2104(c)(2)]

• Optionally, the declarant's characterization of each asset and liability. [Fam.C. § 2104(c)(2)—“may also set forth the declarant's characterization of each asset or liability” (emphasis added)]

Each party's preliminary declaration of disclosure must be accompanied by a completed income and expense declaration ... unless a “current and valid” income and expense declaration has already been provided. [Fam.C. § 2104(e)]

A preliminary declaration of disclosure may be amended without leave of court. [Fam.C. § 2104(d) (also requiring proof of service of any amendment to be filed with court)]

Indeed, though stated optionally in § 2104(d) (“declarant may amend ... ”), appropriate amendments as required by the circumstances are mandatory: The duty to disclose includes “a continuing duty to immediately, fully, and accurately update and augment” a party's disclosures “to the extent there have been any material changes ... ” [Fam.C. §§ 2100(c) (emphasis added), 2102(a)(1)]

Except by court order for good cause, before or at the time the parties enter into an agreement for the resolution of property or support issues other than pendente lite support, or, if the case goes to trial, no later than 45 days before the first assigned trial date, each party, or the attorney for the party in this matter, shall serve on the other party a final declaration of disclosure and a current income and expense declaration, executed under penalty of perjury on a form prescribed by the Judicial Council, unless the parties mutually waive the final declaration of disclosure. The commission of perjury on the final declaration of disclosure by a party may be grounds for setting aside the judgment, or any part or parts thereof, pursuant to Chapter 10 (commencing with Section 2120), in addition to any and all other remedies, civil or criminal, that otherwise are available under law for the commission of perjury.

Article Submitted By: Attorney Shannon M. Jenkins

The Holidays are Not An Emergency

Family law courts can become congested this time of year. The congestion is not from the scheduled matters, which in some instances may be postponed until after January 1 by parties and attorneys to avoid conflicting holiday plans, but from unscheduled EX PARTE or emergency matters parties filed at the "last minute" with the hope of the court addressing glitches in holiday custody schedules.

When seeking emergency relief, be prepared to explain to the court why the situation was so troubling as to have the Court stop what it is doing to address your problem; and with that, why the other side should not have the right to ample time to tell their side of the story. Christmas falls the same time every year. If there is a dispute over what is going to happen on Christmas eve, you had better prepared to have things filed by Columbus Day. Court are loathe to make these kinds of decisions, and ever more troubled when the analysis takes place within a limited emergency application. It is best to limit these requests to when there is "blood on the carpet" or when there is true "irreparable" harm that might result if the Court doesn't act on an emergency basis.

Article Submitted By: Attorney Daniel Gold

Profit-Based Bonuses are Lawful

In a rare pro-business, pro-employer opinion, the California Supreme Court makes the easy call, holding that profit-based bonuses are lawful

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McKenna Long & Aldridge

Ross Hyslop

USA
September 18 2007

Outside of California, relatively few employers may have noticed when, on August 23, 2007, the California Supreme Court confronted what it called “a significant question of California wage law.” Why was this event so “significant” in California wage law such a non-issue elsewhere? By confirming it’s okay to pay managers a profit-based bonus derived from subtracting operating expenses from revenues, the court simply validated what most of us had considered not only acceptable for decades, but highly effective in motivating employees.   

Article Submitted By: Attorney Shannon M. Jenkins

Make Sure to Get in Writing

In the rush for parties who are ending their marriage to save money, people find themselves having verbal "agreements" as to how things are going to work out. This is not the way to go! All understandings regarding kids, financial support, and property division need to be in writing at a minimum to have any legal effect. The first step is to contact an attorney experienced in this area of law to piece a successful resolution strategy. The dollars spent up front, will save many dollars, significant resources, and time, later on when there are enforcement and interpretation issues that often crop up with verbal agreements.

Article Submitted By: Attorney Daniel Gold

Be Careful When Dividing Pensions in a Divorce

One asset that has tended to become overlooked in many dissolution matters are defined benefit pension plans. Defined benefit plans are plans in which the employee holds in a pool of money which is contributed by current employees, perhaps the employer, and then invested by the fund which maintains the monies. This pool of money is then used to fund continuing income streams for the retirees. With defined contribution plans (401K, deferred compensation plans, etc). The employee funds their own personal account, which the employee can withdraw from after retirement. The defined contribution plan is limited to the amount the employee (and/or employer) has invested in the account. With the defined benefit plan, the monies last the balance of the retiree's lifetimes, in theory. That last fact, in this age of increasing life expectancy, has created incentives to go away from defined benefit plans, particularly as the number of younger employees paying into these plans has dwindled.

When dividing defined benefit plans, the trial court has discretion to divide these plans in the most equitable fashion. The trick is understanding in most cases there is no current funds in which to draw cash if the employee is below retirement age, and still actively employed when the marriage comes to an end. Hence, the Court must take into account the number of years the parties were married, the number of years the employee spouse was employed and a member of the fund, and the income they will be at or or near retirement age.

In some cases, the parties lawyers' will employ actuaries to estimate the present community interest value in the pension. While these estimates maybe accurate, there are two problems which occur with these estimates. First, they assume that the employee spouse will live for up to 20 years after retirement, which may not be the case. Second, the estimates will sometimes be large enough to force the employee spouse to give up other assets to keep their pensions intact.

The more common way is for the parties to request that the Court order the pension to be divided when the employee spouse retires. Once this is done, the Court can order a separate order (A DRO or Domestic Relations Order). The most common method to determine and divide the community interest in a pension is to use the "time rule". The "time rule" is a fraction used to determine the number of service credits included in the years that the spouse was employed during the marriage. While the most common, the method may not be the best. As a recent case In re Marriage of Gray [(2007) 2007 DJDAR 1482] pointed out, the parties and attorneys need to obtain an accurate understanding about how the pension benefits are determined before selecting the method to apportion separate property and community property benefits.

Article Submitted By: Attorney Daniel Gold