What are Typical Divorce Settlements in California?
Learn more about common divorce settlement terms
What Are Typical Divorce Settlements in California?
What are typical divorce settlements in California?
Typical divorce settlements in California include terms that fit many cases. While every case is unique to its own facts, there are certain divorce settlement terms that overlap. What we write here are the overlapping terms we, as experienced California family law attorneys, see most often. We hope this article will give you some perspective on these common terms.
Will these terms fit your case? This article can’t answer that question because it’s not legal advice for your specific situation nor is it legal advice in general. But the good news is this – if you need legal advice for your divorce and your case is in Orange County, Los Angeles or any of the other five Southern California Counties, contact us and we will offer you an affordable strategy session to discuss your specific situation and what settlement terms may make sense for you.
What are typical divorce settlements about child custody and visitation?
Child custody laws in California are focused on the child or children’s best interest. That is a broad term that includes the child’s health, safety, education and general welfare. Let’s take a look at typical divorce settlement terms for California child custody cases?
Typical child custody labels are joint, sole and sometimes primary
Joint legal custody is about sharing. The parents are required to share in the decision making process concerning the child or children.
Parents will agree to joint legal custody in a typical divorce settlement unless there is a good reason for one parent to have sole legal custody. Sole legal custody settlements are the exception because a parent typically does not want to give up such an important part of being involved in his or her child’s life.
Sole legal custody agreements in a typical divorce settlement are generally intended for cases that involve abuse, neglect, child endangerment or one where one parent is in a clearly superior position (and the other parent is in a poor position) to make decisions about health, safety, education or general welfare consistent with the child’s best interest. These are not the only reasons but the most common.
Joint legal custody provisions can vary quite a bit. We have seen divorce settlements that just state the parents will share joint legal custody. Yes, that’s all it says. Is that typical? Hard to say because we don’t draft them that way. For us, we lay out what joint legal custody means and we even write what issues require actual mutual consent (if any) versus just “conferring” before a decision is made.
There are typical divorce settlements regarding parenting time
While there is no one size fits all term regarding parenting time in a child custody case, there are certain parenting time schedules that are more common than others. Regardless of whether your matter is in Southern California, the parenting time schedules within the Orange County Parenting Guidelines are still very helpful to get you perspective on how a California judge may rule on a custody schedule.
What are typical divorce settlements about child support?
California child support laws are designed to make child support uniform throughout the State. It doesn’t always work out that way especially in cases where there is sharp disagreement about income and not just what a parent really earns in income but what a parent should earn.
But there are typical divorce settlement terms in child support cases that we see in most cases.
Duration of child support is set by statute
Most spouses with children will simply borrow from the Family Code regarding the duration of child support. As we wrote in our California child support page:
Child support terminates when a child turns 18 years old except when the 18-year-old child is still a full-time high school student and lives with a parent. In that situation, child support terminates when the child turns 19 or graduates from high school. whichever occurs first. California child support also terminates if a child marries, joins the military, is emancipated or dies.
It’s not typical for parents to agree to longer support but it is possible.
Amount of child support is typically the California guideline amount
Typical divorce settlements set child support at “guideline”, which is the support number based on a mathematical calculation that is presumed to be correct unless the judge has a specific basis that the law allows to deviate from the guideline amount.
Get a couple of W2 employees and an agreement on parenting time and guideline is a piece of cake. The more complex income and disagreements about parenting time become, the harder it is for spouses to reach a child support settlement.
What are typical divorce settlements about spousal support?
We have written a comprehensive guide on California spousal support laws and procedure. Check it out for some informative reading. Let’s talk about what typical divorce settlements are that involve spousal support.
Typical spousal support for a short term marriage is half the duration of the marriage
It’s typical to call a marriage of under 10 years a short term marriage. That’s because most people define it that way even though the Family Court judge has the discretion to treat a short term marriage as a long one depending on the facts. But we are not talking about what sometimes happens but rather what typically happens and in a typical divorce settlement that involves a marriage of less than ten years, the duration of spousal support is half the duration of marriage. So, let’s assume it’s a 6 year marriage. Half the duration of a spousal support order would be 3 years.
Typical spousal support for a long term marriage doesn’t have a specific termination date
Just as it’s common to believe a marriage of under ten years means the duration of spousal support must be half the duration of the marriage, many people also think that just because the ten year mark is hit, spousal support is forever. Neither is true in every case and that is where California law and the way spousal support issues are handled has evolved over the past 5-10 years. It’s not automatic one way or another although it is typical that divorce settlements that involve a marriage of ten years or more don’t have a set termination date other than of course the remarriage of the supported spouse or death of either party.
So what is a typical divorce settlement if a marriage is, hypothetically, eleven years long? The spousal support order will typically be until the death of either party, remarriage of the supported spouse or further order of the Court. That “further order of the Court” is typically in the divorce settlement and could include an order in the future of a reduction or termination of spousal support or the court’s power to award it.
It’s never a good idea to make assumptions on spousal support or think that your case fits into some typical or cookie-cutter approach. The advice of an experienced divorce lawyer is critical in divorce settlements that involve spousal support so your specific factual situation can be analyzed. Self representation is simply a bad idea.
Typically, temporary spousal support is based on a computer program
Family law judges will typically follow the computer formula that also calculates child support to determine what temporary spousal support should be. At our law firm, we use a program called Dissomaster although that is not the only one out there. A typical divorce settlement on temporary spousal support (spousal support while the divorce is pending and before a final divorce judgment) also involves inputting information into the computer program. The computer program then gives you what the temporary spousal support should be.
Long-term spousal support is typically based on the marital lifestyle
Is there a typical settlement on what the spousal support number should be at the end of the case? Not really. That is because the marital lifestyle can vary so much from case to case. You may think income and ability to pay are the only factors but you would be missing many others. We can’t really write about a typical divorce settlement that involves spousal support because the uniqueness of the case drives everything. But what we can tell you is the marital lifestyle is the benchmark for it. Here is why:
Let’s assume it’s a 15 year marriage, the husband earns $250,000.00 per year and the wife is a stay at home mom. There are three kids and they are between 13 and 15. They live a lavish lifestyle with luxuries and the wife has never had to work throughout the marriage. They saved very little money and have debt when they separate.
Now let’s take the same hypothetical and the same income but they lifestyle was very middle class and not lavish at all. They were frugal and saved a lot of money throughout the marriage and have very little debt on the date of separation.
Do you think the spousal support in these two cases is the same? Just because the husband earns the same income in both hypotheticals and the wife has not worked for a decade and a half? When a marital lifestyle analysis is conducted, you may be surprised to learn it is not although how much of a difference will depend on more facts than we can mention here. That is why Family Code 4320 is helpful. It goes through those factors.
Some divorce settlements on spousal support include Gavron Warnings
Gavron warnings are becoming more common in divorce settlements that include spousal support provisions. What is a Gavron Warning and how is it applied? Read the previously linked informative family law article we have written on the subject.
What are typical divorce settlements about the family home?
The home is truly the castle for many. It’s where the heart and family is and, during the marriage, can be the fortress for sanctuary and security. In a divorce, it can become like a fight over Jerusalem. Let’s go over typical divorce settlements with the family home.
Typical divorce settlements about the family home result in a sale or buyout
What can two spouses do with a home in a divorce settlement? It’s doubtful they would want to continue to own it together although that does happen sometimes and is called a deferred sale.
What typically happens is the house is sold and the proceeds are divided (although not always 50/50 if the house equity is not all “community”) or one spouse buys out the other one. Let’s talk about each of these scenarios:
Sale of the family home in a typical divorce settlement
The sale of the family home is typically not a contentious process. In fact, in a typical divorce settlement, it’s as simple as picking a real estate professional, cooperating in the sale process and having an agreement (preferably a stipulation and order) in place for what happens with the proceeds. Sale provisions in a divorce settlement typically include, at a minimum, provisions about:
- How the real estate professional is chosen,
- How the price will be set and adjusted (typically by mutual agreement with input from the real estate professional),
- What happens in the event of a disagreement regarding the price,
- How decisions regarding repairs will be made,
- Delegation of responsibility regarding showing the property and keeping it in a show condition. This is especially important if the spouses don’t live together,
- What issues the court will decide for the spouses if they cannot agree during the sale process,
- How the proceeds will be handled.
Your experienced family law attorney should draft the stipulation and order (agreement that is then approved and signed by the parties, lawyers and the judge) and you should speak with him or her regarding any unique characteristics of your case that may require more or different terms. One such term typically involves “characterization” of the proceeds and whether the spouses agree that it will be community in whole, community and separate in specific percentages or numbers or they cannot come to an agreement for a variety of reasons and the proceeds are set aside in some account the issue of characterizing the proceeds is reserved for later determination.
Buyout of the family residence in a typical divorce settlement
A buyout occurs when one spouse wants the house and is willing to pay the other spouse his or her community property share to buy him or her out. For example, let’s say a house has $300,000.00 equity in it and the house is community property in its entirety. The wife wants to keep the house and the husband is okay with that. The wife would buyout the husband by paying him $150,000.00.
A spouse buying out the other spouse sometimes argues it should be less than 50% because if the house were sold, there would be commission, closing cost and other expenses in the sale of the home so the spouse being bought out should take less. It’s an interesting argument but the spouse being bought out would argue, “then what’s the point of me agreeing to a buyout?” In other words, if the spouse is going to get the same amount in a sale versus a buyout, what’s the motivation to agree to a buyout?
These issues are negotiable and we have seen it go both ways.
More importantly, let’s follow through on our hypothetical. How would the wife buyout the husband and pay him $150,000? Typically, this occurs through an offset of another asset and a refinancing. For example, let’s say there is a bank account that has $300,000.00 in community property funds in it. Pretty easy right? Husband keeps the account and wife gets the house. This can occur with just about any asset but care must be taken and financial planning may be important. For example, the tax consequences of liquidating an asset (like a 401(k) as one example), knowing the current or upcoming real estate market (whether the market is stable, volatile, etc.), etc. are all important considerations. Advice from a real estate professional and/or financial advisor is helpful and may be necessary.
So let’s assume the buyout occurs but what happens to title and the loan on the house? In many situations, both the husband and wife are both on title and obligors on the house mortgage. Once the buyout occurs, title is typically transferred to the other spouse but you should check with your mortgage provider to make sure that doesn’t trigger the entire amount of the mortgage becoming due. Regarding the obligation on the loan, most spouses who are bought out don’t cherish the idea of just remaining on the loan. That can negatively affect their borrowing power and potentially their credit, especially if payments are missed.
That is why typical divorce settlements have a provision about refinancing that must take place and that can happen either with the buyout (and as a condition of it) or at a later date. We won’t go through the various potential terms that go with such an agreement here but perhaps this will be the subject of a future article. One again, getting the advice of an experienced family law attorney is critical.
Know about Family Code 2640 and Moore Marsden
A couple of previous articles we have written may be helpful to you as they do typically come up. They are:
- Family Code 2640 and reimbursement of a separate property downpayment on the residence; and
- Moore Marsden claim, which typically comes up when a house is one spouse’s separate property but community earnings or savings paid for the mortgage (and reduced principal on the mortgage) during the marriage.
What are typical divorce settlements about bank accounts?
Assuming there are no disputes regarding whether a bank account is community versus separate property, the typical divorce settlement is division of the bank account as of the date of separation.
Community bank accounts are typically divided equally
A community bank account is generally an account where all of the money in it is the result of money earned or saved during the marriage from a community source and there are no separate property claims of any kind to the money in that account. For example, assume a husband and wife have saved up $50,000.00 in their checking account as of their determined date of separation. $25,000.00 goes to the wife and $25,000.00 goes to the husband.
Unfortunately, spouses don’t always amicably divide their bank accounts early on and post separation earnings or other separately traced funds work their way into the account. Division then becomes more complicated as money is spent from the account after separation and the question becomes, what was used? Community funds or separate ones? Fortunately, there is way to figure that out without too much complication but that is beyond the scope of this article.
Separate property bank accounts are typically awarded to the spouse who owns it
Let’s assume the wife has an account with $75,000.00 in it and that account is from the sale of property she owned prior to the marriage. The account has never been commingled with community funds and the husband has not been a named account holder. A typical divorce settlement results in the money remaining what the account always has been – the wife’s sole and separate property.
What are typical divorce settlements about a 401(k), pension and other retirements?
401(k) and pensions are typically divided by a qualified domestic relations order
Typical divorce settlements put a private 401(k) and pension through a qualified domestic relations order (called a QDRO for short). The United States Department of Labor has a detailed pamphlet on QDROs. Our firm brings in an outside and independent lawyer whose expertise is preparing such documents (our firm does not prepare them). The QDRO gives instructions (through a court order) to the Plan provider regarding the community and separate property aspects of the 401(k) or pension. Rules regarding military or public related retirement plans may vary and we don’t discuss them in this article.
IRAs are typically divided by a roll over
Individual Retirement Accounts (IRAs) are typically divided through a roll over or other tax advantageous ways. The advice of a tax professional his highly recommended.
Typical settlements can also include offsets
Not everything has to be sold or divided. Sometimes, one asset can be offset for another. $200,000.00 equity in a home that is community property can offset $200,000.00 in a bank account that is community. The same can be set for other assets or accounts. But care must be taken here. As we wrote earlier, the volatility of real estate prices, the tax advantages of certain assets or accounts and other factors may make the analysis more complex than just a dollar for dollar one. For example, if the real estate market is high volatile, $200,000.00 equity may not be as secure as $200,00.00 in an investment account that is consistently earning interest.
What are typical divorce settlements about debts?
Debt should hopefully be easy to resolve and typical divorce settlements either divide community debt by assigning it to one spouse as an offset for something else, cause the debt to be paid through the settlement or divide the debt 50/50. It is a good idea in any divorce settlement that involves debt for there to be some sort of security or back up measure in the event the spouse assigned the debt doesn’t pay it. There are a lot of options available here and we will discuss it in a future article.
What should the divorce settlement be in your case?
That is the most important question. That question requires consultation and retention of an experienced and knowledgable family law attorney. When you are ready to take that step, we are here to help.