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Seattle Scott
Seattle Scott, Lawyer
Category: Family Law
Satisfied Customers: 739
Experience:  I have 25 years experience as a Washington State Family Law Attorney.
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History: April 1983: Gary as a single man purchased 48284

Resolved Question:

History:
April 1983: Gary as a single man purchasedXXXXX for $116,500; w/ 20% down or $23,300 equity.
March 14,1990: Gary marries Mary, Gary works out of the home, and Mary works as homemaker.
Sept. 23, 1990: Brian is born.
May 28, 1992: Scott is born.
1996: Bought two rentals (homes “A” and “B”) in Utah at ~$140k each w/ 20% down is ~2X28k=$56k equity.
Sept. 2000: Mary starts working out of the home.
July 2002: Gary stops working.
August 2003: Invested $25.5k into Molecular Imprints Series “A” at 65cents/share for 39,231 shares.
August 2004: Invested $100k into Molecular Imprints Series “B” at $1.50/share for 66,667 shares.
March 2005: Sold rental home “A” for ~$178k netting ~$75k cash.
June 2007: Sold rental “B” for $272,500 netting $185,716 cash.
January 2008: Mary, Brian (age 17) and Scott (age 16) move to a separate accommodation.
Sept. 2009: Brian starts college.
Sept 2010: Scott starts college.
July 2013: Gary is about to sell Arcadian St.; both Gary and Mary are on title as joint tenants.

Comments:
Mary received no proceeds from sale of rentals “A” and “B”. She made substantial contribution the household finances from Sept. 2000 – January 2008. Mary assumed sole financial responsibility for herself and the Boys from January 2008 through their HS years, into college and up to the present time.

Mary and Gary continue to be legally married as of today. As of today, joint assets are limited to equity in Arcadian St. and 105,898 shares of Molecular Imprints stock. No liquidation opportunity exists for this stock as of today.

Arcadian St. is soon to sell for ~$720k with a mortgage payoff of ~220k and an estimated tax basis of ~$135k. Gary wants $123,500 (his assessment of the home equity before marriage) off the top of the proceeds and then split the rest 50/50.

Questions:
1) Does Mary have any claim to the pre-marriage equity?
2) Does Mary have any claim to the proceeds from the sale of rentals “A” and “B”?
3) Does Mary have any claim to child support from Gary for her sole financial support (January 2008 through their HS years, into college and up to the present time)?
4) Does Mary have to divorce Gary to force her 50% ownership of the stock?
Submitted: 12 months ago.
Category: Family Law
Expert:  Seattle Scott replied 12 months ago.

Questions: 1) Does Mary have any claim to the pre-marriage equity? Yes. I would call all of the interest in the house community property by now, due to commingling of post marriage separate property earnings to pay the mortgage, insurance and taxes on the house, also it looks like you refinanced at some point, further eroding the separate property equity claim. But you have a claim for reimbursement for the reduction in principal on the loan since 2008 if you separated at that time, meaning maintained separate bank accounts etc. 2) Does Mary have any claim to the proceeds from the sale of rentals “A” and “B”? Yes, unless you can show you purchased with pre-marital funds and didn't contribute community property earnings to pay any of the rental houses' expenses. the rental houses and the gain on sale are presumed to be community property as bought during marriage. 3) Does Mary have any claim to child support from Gary for her sole financial support (January 2008 through their HS years, into college and up to the present time)? No. that would be for retroactive support which is not allowed. 4) Does Mary have to divorce Gary to force her 50% ownership of the stock? Not sure on the stock. I know she could file for legal separation ( same process as a divorce) and get a court ordered property division in that proceeding. She could also file a partition case, that is where you ask the court to divide a jointly owned asset, but I have not heard of that being done between spouses.

Customer: replied 12 months ago.
Is it not so that CA community property law stipulates that property owned prior to marriage is separate property and not community property? Your answer to my 1st question suggests what might be argued before a divorce judge rather than a strict interpretation of the law.
Expert:  Seattle Scott replied 12 months ago.
Yes I agree with your response. You asked if she had a claim - I think she does. But I agree that the house when purchased, and though the date of marriage, was your separate property.
Expert:  Seattle Scott replied 12 months ago.
I am going to correct myself. Below is the "separate property" definition in CA, but also see Sec 2640. If you can prove or "trace" the down payment amount from 1983, then she doesn't get any part of that.

FAMILY.CODE
SECTION 770-772




770. (a) Separate property of a married person includes all of the
following:
(1) All property owned by the person before marriage.
(2) All property acquired by the person after marriage by gift,
bequest, devise, or descent.
(3) The rents, issues, and profits of the property described in
this section.
(b) A married person may, without the consent of the person's
spouse, convey the person's separate property.



771. (a) The earnings and accumulations of a spouse and the minor
children living with, or in the custody of, the spouse, while living
separate and apart from the other spouse, are the separate property
of the spouse.
(b) Notwithstanding subdivision (a), the earnings and
accumulations of an unemancipated minor child related to a contract
of a type described in Section 6750 shall remain the sole legal
property of the minor child.

CALIFORNIA CODES

CALIFORNIA FAMILY CODE

Division 7. DIVISION OF PROPERTY

Part 7. REIMBURSEMENTS

§ 2640.
(a) "Contributions to the acquisition of property," as used in this section, include down payments, payments for improvements, and payments that reduce the principal of a loan used to finance the purchase or improvement of the property but do not include payments of interest on the loan or payments made for maintenance, insurance, or taxation of the property.
(b) In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party's contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source. The amount reimbursed shall be without interest or adjustment for change in monetary values and may not exceed the net value of the property at the time of the division.


Customer: replied 12 months ago.


Thanx

Expert:  Seattle Scott replied 12 months ago.
When I am wrong I make it right.
Customer: replied 12 months ago.

After reviewing the California codes and your responses, we were wondering if you could further clarify some information.


 


Also, we are asking these questions on behalf of Mary, I am her son requesting this information for her.


 


Mr. Scott, as for the co-mingling, there was no joint bank accounts or co-mingling during the entire term of the marriage. Mary did not contribute towards the Mortgage, Property Tax, or Insurance of the house. Although she did pay for things like clothing, food and other household use items.


 


Regarding rental properties A and B, the money from the sales is not in a bank account, and has been spent for years. We were wondering if she could be compensated for her share of rental properties A and B, from this sale of their personal residence.


 


As a reminder, the only current assets are the equity in the sale of this personal residence, and the molecular stock.
Thanks again for your help and quick responses.

Expert:  Seattle Scott replied 12 months ago.
As long as Gary is limiting his separate property claim to the house proceeds to the equity value at the time of marriage ( $123.5K ) that is probably reasonable, but I am not sure how he determines date of marriage property value now. Tax assessed value does not matter. The co-mingling issue is only relevant if Gary wants, off the top, the increase in house value during marriage - which he isn't asking for. the one thing I am scratching my head over is that at some point the original separate property debt on the premarital residence was paid off by the community during a refinance. So don't let Gary talk about market value at date of marriage and confuse this with equity. He had about $23K equity in the house 7 years before marriage. So if the house was worth $123K more than the date of marriage debt on the house, then that is his separate property equity. But if he uses market value as his separate property interest, you have to subtract the separate property debt ( about $90K) on the house to get a separate property interest value.

On the rental houses sales, there was about $350K floating around after the sales and 3 years later Mary moves out. I question where the $350K went since Gary and Mary were always keeping their finances separate. I assume Gary had sole control over the $350K. I would investigate where that money went, or take the position that Gary owes Mary 1/2 of the $350K unless he can show that is was expended on community debt, or on anything that benefited Mary.
Seattle Scott, Lawyer
Category: Family Law
Satisfied Customers: 739
Experience: I have 25 years experience as a Washington State Family Law Attorney.
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