What is the Impact of a Buyout of the Business on Alimony Payments?

Is a Spouse Entitled to a Buyout of Community Property and Spousal Support?

Recently, I had a case where the divorce lawyer who represented the husband tried to argue with me that just because his client was paying mine a significant buyout of the community property business, he should not also have to pay spousal support consistent with the marital standard of living. I have heard this argument before. It tries to use the “hey, your client is getting enough money in the buyout, why does she need spousal support?” argument.

The answer is the same each time – because she is legally entitled to it and you can’t punish a spouse for “having contributed to the growth of the community property by not receiving spousal support.” Good words, right? They are not mine. They actually belong to Justice Yegan of the 2nd District, Division six of the California Court of Appeal.

The appellate case, which is still good law in California, is In Re Marriage of Martin. We will skip the citation for now since it probably doesn’t matter all that much to you. What does matter is the argument the opposing lawyer tried to make in my case has already been made and failed.

Back in 1991, Dominic M. Martin’s lawyers made this same argument to the Court. He claimed that he could not afford and should not have to pay his wife spousal support on top of the buy-out she received. What Mr. Martin didn’t understand and the appellate court explained to him is that a spouse cannot finance a buy-out of community property and then claim an inability to pay spousal support. In other words, you can’t pay your wife with her own money and then claim she shouldn’t get alimony.

Is this a fair result? Yes, but that doesn’t mean it is the right result in every case. There are cases where the buyout is so significant that spousal support does become unnecessary and can be “reserved” (although not terminated). However, we don’t see that too often in a long term marriage (a marriage of 10 years or more) and especially one where the supported spouse has little to no income.

Do you have a case that involves a buyout and are concerned what impact it may have on spousal support? Contact us today for a consultation.

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