Assembly Bill 939 makes a number of changes to California’s current Family Code, including changing the requirements for summary divorce and changing the way courts award attorney fees in divorces and related proceedings.  More importantly, however, the new law gives each party the right to present relevant live testimony at a hearing before the court.  The court may only refuse to receive live testimony upon a finding of good cause and after stating its reasons in the record.  Assembly Bill 1050 alters the law to contain similar provisions regarding live testimony of children 14 years of age or older in custody or visitation matters.

There is no question that the legislature made these changes with the best of intentions, hoping to give courts access to a greater range and depth of relevant information when making the types of determinations that can have a lifelong impact on families and children.  But the unfortunate side effect of both of these new laws is a higher cost and slower speed for divorce proceedings.  Especially in the case of AB 939, this new right to present live testimony could conceivably become a weapon for unyielding spouses to increase costs and delay in bitter divorce proceedings.

While valuing a person or real property can be complex in its own right, valuing a business is even more subjective.  It is often possible for distinguished and experienced experts to arrive at vastly different appraisals for the same business.  This can quickly create conflict and stall divorce negotiations.  To promote some uniformity, experts in the process of business appraisal generally rely on three distinct valuation methods: the comparable sales approach, the income statement approach, and the balance sheet approach.

The comparable sales approach is the simplest, by which an appraiser simply examines the sale value of similar businesses that have recently changed hands in the same area.  This provides a practical estimate but may be difficult in the case of unique or novel businesses, or following a period of economic change.

The income statement and balance sheet approaches depend upon a fair and accurate accounting of the assets, liabilities, and profitability of a business.  Unfortunately, these approaches require a great deal of information and can vary based on the quality of the data and the accounting method used.  But in cases where no comparable sales figures are available, these approaches may provide the only reliable option for valuing a business.

But even if you do not have a complex estate plan and do not plan to build one, it is still very important to have a will.  While California law does provide for the contingency of a person dying without a will—a process known as intestacy—these rules can be vague and are often inflexible.  Your family ultimately does receive your property, but not in the amount or proportion you likely preferred.

In short, any indication you may have given regarding who you wanted to receive certain property does little good unless you memorialize it in writing in accordance with the California Probate Code.  The process of intestate succession can very easily cause family strife.  With no executor designated, it falls to the courts to appoint someone to administer the estate.  This can quickly create conflict if several family members step forward to assume the responsibility.

Moreover, a variety of people who were important to you during your life may have few or no rights under California intestate succession laws.  A longtime girlfriend or boyfriend, fiancé, or other close personal friend has no rights to property through intestate succession.  This system only distributes property to family members and does not take into account any non-familial relations, no matter how close.

A divorce settlement, custody agreement, or court order allocates each of these types of custody in one of two ways—solely to one parent or jointly for both parents to share.  Moreover, the same type of allocation need not apply to both types of custody.

For example, a mother may receive sole physical custody of her child while jointly sharing legal custody with the father.  This means that the child lives with the mother but the father still has the right to participate in decisions regarding the child’s upbringing.  In cases where one parent receives sole physical custody, the other parent may receive visitation—the right to periodic and temporary physical possession of the child.

Each type of custody has pros and cons.  Sole custody promotes stability in the child’s life and avoids the conflicts that can come from requiring both parents to agree on decisions affecting the child.  But if the parents are still able to work together amicably, joint custody gives the child the benefit of having both parents participate in his or her life.

Ultimately, the best custody arrangement depends on the unique family situation and the relationship between the parents and their child or children.

Some experts believe this could be among the most expensive divorces in the history of California, costing up to $19 million in fees alone.  But this unbelievable cost does not come solely from the fact that the divorcing couple had substantial assets.  Other high profile divorces in California have resolved for a fraction of this cost.  Instead, the contentious nature of the divorce and Frank McCourt’s ownership of the Dodgers baseball team created a number of issues and raised substantial questions as to how the team should be valued and how that value should affect property division.  Moreover, the Dodgers organization has faced major challenges during the ongoing divorce proceedings.

This case is instructive in two ways.  First, in cases where one or both couples own a business during a marriage, failing to plan for the apportionment of that business in case of divorce can have a major adverse impact on the couple and the business itself.  Apportioning a business is a complex task that can drive up legal and other related fees and substantially delay completion of a divorce.

Second, a contentious divorce is never good for either party.  While the emotional stress of divorce may make it difficult, divorcing couples should make every effort to work together to resolve their issues without litigation.  This can decrease the cost, length, and emotional burden of divorce and help maintain discretion concerning private matters of the couple.

At first blush this seems like an elegantly simple system.  But many issues can arise during community property division that make it difficult to determine what constitutes half of the marital estate.  Among these, two issues are most prominent and, in many cases, most contentious.  What property is community property?  And how should the court assign value to community property?  These two issues can quickly turn this seemingly simple system into one rife with complexity and conflict.

Determining what constitutes community property can become difficult when dealing with assets acquired over a period.  If a spouse starts a business prior to marriage but continues to operate it during the marriage, what percentage of the business is community property?  The same applies to investments acquired before the marriage or pension plans that may have vested prior to the marriage.  Such assets sit in a gray area between community and personal property.

Even once the court has identified community property, similar issues can make valuation difficult.  Assigning a value to bank accounts, investments, and even real estate is fairly straightforward.  But educational degrees, professional licenses, or closely held businesses are also assets subject to distribution.  California divorce attorneys must often seek advice from economic experts and professional appraisers to assign value to these assets.

Nuptial agreements have a negative reputation because they appear to anticipate the failure of a marriage before it even begins.  But while the desire for a pre- or post-nuptial agreement can be a difficult subject to broach with one’s spouse, having one of these agreements in place can, in some cases, actually strengthen a marriage and increase its probability of success.

How?  These agreements can help avoid future conflict by settling in advance issues that married couples inevitably face.  By confronting these issues with a clear head at an early stage of the marriage, couples can avoid many of the emotionally charged arguments that can damage or destroy a marriage.  Even some marriages that are already under stress can alleviate this tension by settling issues through a post-nuptial agreement.

And should a couple ultimately decide their marriage is unworkable, having a pre- or post-nuptial agreement decreases the cost, duration, and emotional burden of divorce by settling the most contentious divorce issues—such as property division, alimony, and custody issues—in advance.  Without such an agreement, a divorcing couple must either agree to a distribution plan during the divorce proceedings or submit to distribution by the court.

Family law is a subjective and nuanced area of law, making experience all the more crucial.  An experienced divorce attorney knows what type of settlement his or her client can realistically expect under the particular set of circumstances.  Law firms experienced in family law also have access to respected experts—such as child psychologists, real estate and property appraisers, and other skilled professionals—whose opinions can be crucial during both negotiations and litigation.  Building a strong case for a client can provide important leverage during negotiations, even in cases resolved outside of court.

Few areas of practice are as delicate as divorce and family law.  As experienced family attorneys, we understand that in many cases discretion and compassion can be as important to our clients as legal acumen and negotiating prowess.  We know that many of our clients come to us during particularly vulnerable and emotional periods of their lives.  We understand that by being responsive to their needs, we can be a source of comfort during an otherwise difficult time.