Attorney offers tips on the law of attraction

It’s the season of love, but with a 50-percent divorce rate and the challenges facing same-sex couples, love also comes with legalities. Michele Sacks Lowenstein, a Mission Hills resident, has been a family law attorney for 28 years. A certified family law specialist, she is chairperson of the family law section for the San Diego County Bar Association. Lowenstein joined Christy Scannell, SDUN editor, to discuss love’s legal problems.

Q: At what point in a relationship should people seek legal counsel?

A: It depends on the situation. You might have an older couple, this is a second marriage. One may be widowed, one may be divorced, and they have adult children. They have a really good reason for wanting to do pre-nuptial agreements—they want to make sure that their assets get transferred to their biological children. So a good time for that couple is before they get married. They are certainly in a different situation than two people who are much younger who have stars in their eyes and haven’t even built anything yet.

Also if [a same-sex couple] is thinking of becoming registered domestic partners because they need to do the tax planning early. They really need to take a trip not only to their attorney but to their accountant to try to determine how they would structure a distribution or division of assets upon death or dissolution.

Q: How does a prenuptial agreement work?

A: The purpose of a prenuptial agreement is to substitute what a state will do with respect to the distribution of your property on the event of death or divorce. The relationship is going to end one way or the other. The state in which somebody lives is the state law that is going to govern the distribution or division of assets in the event of death or divorce unless the have a prenuptial agreement.

Q: Is there a legal mistake people often make when they marry?

A: Yes, not keeping their separate properties separate. In California if you have property prior to marriage it is your separate priority. That means if you can prove it, the California courts aren’t going to divide that – it means it wasn’t earned during marriage. Because community property is defined as anything that is acquired during marriage through your energy, skill or time. But let’s assume you’re sitting on a large investment account and then you get married and you put it in joint names. What you’ve done is you’ve transmuted it. You’ve turned it into community property. Then the burden is on the person who had the account previously to trace it and show that it was their separate property.

Q: So if you buy a property prior to marriage you do not have to split the value 50/50?

A: There are two considerations with that. Number one, if you refinanced the house and you’re using your spouse’s credit, the bank is going to require a quit-claim deed from your spouse, otherwise they’re going to put you both on title. The other thing is even if you don’t put the other spouse’s name on title if there has been appreciation from the date of marriage to the date of divorce on the real estate then the community can acquire an interest in the house. That becomes interesting depending on at what point in the real estate market people are getting a divorce.

Q: Anything else?

A: The other thing people do is they throw out their records and that’s a big mistake because the banks get rid of everything after a few years. And so if you’re trying to trace your separate property and you need records from 10 or15 years ago you may not be able to find them. Also, you can’t get your tax returns from the IRS from beyond six or seven years, so it’s really good to keep those.

Q: What are options for divorce?

A: Litigation is when you’re not able to reach resolution of your issues and a judge is going to make a decision for you. Litigation is a very expensive way to resolve issues—attorneys in San Diego County can charge anywhere from $300-600 an hour. Mediation is where the parties meet with a mediator who’s impartial who helps facilitate resolution of their agreement. And that is confidential, unlike litigation where everything that’s filed with the court is open to the public. It’s certainly a much less adversarial and hostile way to dissolve disputes and there’s a lot more satisfaction in the outcome. Collaborative divorce is a very specific method of parties getting a divorce with attorneys who are trained in collaborative law. The attorneys have to sign an agreement that they will not take the clients into court. So it’s different from a traditional negotiated settlement where maybe the parties never go to court but there’s always the threat of court hanging over them. The advantage there is you don’t have anybody that can threaten that they would be going to court. And there also tends to be one or two mental health coaches involved in the process.

Q: What is negotiable in a divorce in California?

A: A lot of times people have issues surrounding whether there is a separate property interest. The valuation of assets, if there is a professional practice or business that needs to be valued. That’s not really a science, there could be disparity of opinion as to what something is worth. There’s also a lot of litigation about fiduciary duty lately. Each party has an obligation to deal fairly with the other and to disclose all assets. There also can be litigation about support. In my experience, that can be more problematic to settle.

Q: How is support calculated?

A: Child support is calculated on formula. We don’t have formulas for permanent spousal support. People tend to get very polarized and very positional over the issue of spousal support because the person who is paying it feels that it is too great and the person who’s receiving it feels that it’s not enough.

Q: What do people not understand about custody?

A: I think some people don’t understand how damaging a custody dispute can be for a child. I attended a seminar last spring where they had adult children of divorce on a panel and they all spoke about their experiences as children with their parents’ divorces. It was one of the most compelling things I had ever attended. Contentious, litigious divorces, especially in custody, can really affect how the child when he or she becomes an adult is going to be able to relate to people and what kinds of relationships and attachments they’re going to able to form.

Q: What special legal difficulties do same-sex couples face?

A: The problem is most states don’t recognize gay marriages or a registered domestic partnership. You also have a huge problem with the federal government not recognizing a gay marriage or the division of an asset with a registered domestic partnership. What’s important about that is if a heterosexual couple is getting a divorce, the transactions between them are presumed to be incident to the divorce and you don’t have tax issues. If you are dissolving a registered domestic partnership, you can’t do any of that. You can’t divide a retirement account because all of that is governed by federal law. You can’t deduct partnership support on your federal [tax] return. And so it’s hugely problematic for same-sex couples that they aren’t given the same tax treatment by the federal government.