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Property Division Issues in Gay Divorce

Law Offices of Warren R. Shiell, Los Angeles Divorce Lawyer

"The next same-sex challenge: divorce" published by Los Angeles Times By Sue Horton, July 25, 2008 

Around the country, same-sex couples are discovering that getting divorced can be far more complicated than getting married. Sometimes the problems stem from living in a state with different laws from the state where the marriage took place.

But even in Massachusetts and California, where married gay couples have the same right to divorce as heterosexual couples, a clash between federal and state laws makes the process anything but equal.

Because federal law defines marriage as being between a man and a woman, the federal government doesn’t extend many standard divorce benefits to same-sex couples. As a result, say lawyers familiar with the issues, even in states where gay couples are allowed to divorce, they face financial consequences that heterosexual couples don’t. Among them:

* If a judge orders a heterosexual couple to divide a pension during a divorce, federal law allows the pension to be divided without triggering early-withdrawal penalties. Divorcing gay couples must pay the penalties.

* Court-ordered alimony payments can be deducted from federal income taxes in straight divorces, but not in same-sex divorces.

* In gay divorces, when a judge orders one party to give money or other assets to a spouse, those assets may be subject to gift or income taxes.

* When real property is transferred from joint ownership to one gay spouse by a court order, capital-gains taxes are often triggered.

Opponents of same-sex marriage say the issues were to be expected.

These problems illustrate why it is a bad idea to redefine marriage in California in a way that is at odds with the rest of the country,” said Andrew Pugno, legal advisor to protectmarriage.com, a coalition of churches, organizations and individuals supporting the California Marriage Protection Act on the November ballot.

Same-sex couples who choose to marry, he said, have to understand that “the federal government doesn’t recognize any marriage that’s not between a man and a woman.”

They’ve given us no choice but to be married forever,” said Ormiston. “Their worst nightmare.”

Read full article

Law Offices of Warren R. Shiell, Los Angeles Divorce Lawyer

Taxes and Divorce - what qualifies for capital gains exclusion

Law Offices of Warren R. Shiell, Los Angeles Divorce Lawyer

An article from the San Fransisco Chronicle by Benny L. Kass, Saturday, August 30, 2008 Read article

Q: I was told by a prominent accountant that there is a loophole in the law that states that you can be exempt from paying capital gains (if you are in a home less than the two-year period) if there are "unforeseen circumstances" involved. Are you aware of this? At the time I was going through an "unforeseen" divorce.

A: In general, in order to take advantage of the up-to-$500,000 exclusion of gain ($250,000 if you file a separate tax return), you have to own and live in the house for two out of the five years before it is sold. But the law does allow a partial exclusion under certain circumstances.

There are three "safe harbors," meaning that if you meet these tests the IRS will not challenge you: 1) changing to a job that is at least 50 miles farther away; 2) major health problems; and 3) unforeseen circumstances. In this third category, if you could not have anticipated an event before you purchased your house, you may also be able to claim a partial exclusion.

While this is fact-specific - and in many cases you will have to get a special ruling from the IRS - there also are some safe harbors that the IRS will recognize. These include: an involuntary conversion of your house; natural or man-made disasters resulting in a casualty to your home; divorce or legal separation; and multiple births resulting from the same pregnancy. It would appear that you may qualify based on your divorce.

The exclusion is equal to the number of days of use times the quotient of $500,000 divided by 730 days. Note that 730 days is two full years. If you are single - or do not file a joint tax return - change the $500,000 to $250,000.

Your accountant knows what he is talking about, so you should ask him to do the calculations. But I do not think he said that you can escape all capital gains tax.

Law Offices of Warren R. Shiell, Los Angeles Divorce Lawyer


Car Talk And GPS tracking devices on Divorce

Saturday August 16,2008. A woman called into Car Talk on NPR to say that she was in the middle of a divorce and she suspected that her husband  had planted a GPS tracking advice on her Ford Explorer. Click and clack’s advice was first take it to a local mechanic (not the one used by the husband) to see if there was device which would be easy to detect. The red flashing light would be a give-away. Then they explored the fun the wife might have “messing with his mind.”  Some of the suggestions were: leave her car out side his best friends house at night; re-attach the car to her clergyman’s car or place the device on a different car every day. Seriously, not only is this a criminal offence but it would backfire in a big way if it came out in the divorce. This prompted me to do a search where I found that a private prosecutor had been prosecuted for criminal tampering where he put a GPS device under a car for his client getting divorce in Colordo. Read article http://www.summitdaily.com/article/20080307/NEWS/186326399. Then I heard that Illinois Governor signed a law that allows the Court to tag domestic violence offenders with a GPS tracking device. http://www.npr.org/templates/story/story.php?storyId=93420266  As I was doing more research on GPS devices I came across this in Slate magazine: Involuntary GPS surveillance is spreading: 1) Companies are selling GPS devices to track lost Alzheimer's patients, as well as sensors that "sound an alarmwhen someone strolls too far." One company is implanting GPS chips in sneakers. 2) "Over 200 paroled burglars in Connecticut will be fitted with global tracking devices as part of the state's response to last month's horrific home invasion." 3) Mitt Romney is demandinglifetime federal GPS tracking of anyone who has used the Internet to commit a sex offense against a minor. Human Nature's question for Romney: If we're talking about the subset of perverts who do their prowling in cyberspace while sitting still in real space, doesn't it make more sense to track them on the Web? (Related column: Why felons should be grateful for GPS monitors.)

Top candidates for a GPS tracking device: 1) Senator John Edwards. 2) Tom Cruises career and lastly 3) The Russian Army. Suggestions welcome.

Judge rules against wife in youtube divorce

A Broadway mogul whose actress wife trashes him in a widely viewed Internet video has been granted a divorce from her.

A Manhattan judge granted Philip Smith a divorce from Tricia Walsh-Smith on Monday on the grounds of cruel and inhuman treatment.

Judge Harold Beeler said that the prenuptial agreement, signed three weeks before the couple's 1999 wedding, was valid. This means Walsh-Smith must leave their Park Avenue apartment within 30 days and Smith, president of The Shubert Organization, the largest theater owner on Broadway, must pay her $750,000. Read article

California Child and Spousal Support: New Mate Income





If I am paying or receiving support and I co-habit with a new partner will their income be taking into account in reducing or increasing support?


That depends on whether we are talking about child or spousal support. In most cases of child support new mate income of either the payor or payee does not count. In cases of spousal support, the income of the payor’s new spouse or nonmarital partner will not affect support, but if the payee gets remarried their support usually ends and if they co-habit the income of their new partner may reduce their spousal support.


Child Support and New Mate Income


After 1993 with the enactment of Family Code section 4057.5, the Court may not consider the income of a subsequent spouse or nonmarital partner of the payor or payee of child support except “in an extraordinary case where excluding that income would lead to extreme hardship to any child subject to the child support award.”  The Family Code only mentions one extraordinary case where new mate income can be taken into account: where a parent quits work or reduces their income or remains unemployed or underemployed because they are relying on the new mate income.  In most of these situations, the burden of proving that a parent could earn more “but for” reliance on the income of a new spouse or partner, is on the parent requesting the modification.


What if the new spouse or nonmarital partner contributes to expenses?


This is a question that is asked on the standard income and expense declaration that must be filed in any child support proceeding. In one case[1] an ex husband brought an OSC for a downward modification of child support based on the fact that the ex wife had re-married a wealthy new husband. Cognizant of Family Code section 4057.5, the trial court said that although it could not consider the income of the new husband, it could reduce the amount of child support that the ex-husband was paying based on the ex wife’s increase in her standard of living. Although it didn’t explicitly say so, presumably this came about because the new husband was paying more expenses. The Court of Appeal overruled the trial court and held that the Court could not consider the new mate income, directly or indirectly, unless it would result in extreme hardship to the children. However, some cases have created the impression amongst some commentators that if an ex-spouses expenses are paid for by a new spouse or nonmarital partner, these “freebies” should be added back to the ex-spouses income as additional non-taxable income. The Court of Appeal has specifically criticized this approach which characterizes as income "anything that reduces living expenses”[2] in so far as it relates to new mate income.  


Spousal support and new mate income


If you are paying spousal support, with the enactment of Family Code 4323 (b) in 1993, the income of a new spouse or non-marital partner cannot be taken into account in calculating spousal support. There is no comparable extreme hardship exception as in the case of child support. The Court of Appeal has strictly construed this provision so that new mate income cannot be taken into account directly or indirectly by virtue of the fact that it may increase the payors disposable income because the new mate pays the payors living expenses. [3] Even if the new spouse causes an increase in the payor’s living expenses, that cannot be taken into account.


The situation is very different for the ex spouse receiving spousal support. Unless otherwise agreed in writing, re-marriage of the supported spouse terminates spousal support. Further, co-habitation with a new partner creates a rebuttable presumption of a decreased need for spousal support.[4] The ex spouse must then prove that the co-habitation has not affected his or her need for support.



© 2008 Warren R. Shiell.  Warren R Shiell is a Los Angeles Divorce and Family Law attorney. All rights reserved. The information contained in this website is an "Advertisement." It is for informational purposes only and shall not constitute legal advice. Nothing in this Website shall be deemed to create an Attorney-Client relationship. An Attorney-Client relationship shall only be created when this office agrees to represent a Client and a Client signs a written retainer agreement.

[1]   In Re Marriage of Wood (1995) 37


App. 4th 1059.

[2]               In Re Marriage of Loh (2001) 93


App. 4th, 325.

[3]               In Re Marriage of Romero (2002) 99


App 4th 1436.


[4]               Family Code section 4323 (a)(1) refers to co-habitation with a member of the opposite sex. The California Supreme Court’s recent decision legalizing same sex marriage broaden this to same sex co-habitation.