The two major financial issues that spouses deal with in a divorce with respect to one another (meaning, not relating to child support for the children’s benefit) is property distribution and spousal support. With property distribution, the parties are negotiating (or having the judge decide, if need be) how much of the existing property at the time of the divorce should go to each party.
Very basically, in California, the parties are to split the community property (that is, the property that was earned or acquired by either party with earnings during the marriage, absent a premarital agreement to the contrary) 50/50 between each other. The separate property belonging to each party (that is, the property that either spouse brought into the marriage, or received in their individual capacity as a gift or inheritance) stays 100% with that party. Although there are numerous factual and corresponding legal complexities that come with this, the basic premise of property distribution law is pretty straightforward: each spouse gets one-half of the community property.
Spousal support awarded in a divorce judgment is somewhat more complex and amorphous, as a judge has relatively wide discretion in how much spousal support to award. Judges are required to look at a variety of factors in determining spousal support, such as what financial and non-financial contributions each spouse made to the marriage, the ability of the respective spouses to earn a living post-marriage, the separate property each will have post-marriage, and so on. Ultimately, the factors all go to determining how much support is needed (and available) for the receiving spouse to enjoy the marital standard of living for at least some period of time while he or she becomes self-supporting.
All of this is set up an issue that sometimes arises when these two issues overlap, which is whether a court will consider the property each party receives in a divorce when setting spousal support and/or modifying that spousal support award in the years following a divorce. In particular, one situation that commonly occurs is that one spouse may receive property in the form of a pension benefit or retirement fund that pays income, and the question arises of whether the court can consider that income-producing property in setting the spousal support amount that party must pay to the other party, even if the property was 100% awarded to the paying spouse.
Pejoratively, this situation is called “double-dipping,” and this term makes some sense. If Husband is receiving the pension or IRA in the divorce as part of his 50% share, then Wife should have also received her own 50% share of other property. And so if Husband is required to spousal support based on the income from his own property, it would seem Wife is getting a “double-dipping” benefit of receiving her own equal share of property in the divorce as well as a portion of the ongoing income from Husband’s income after the divorce.
Despite the “double dipping” term’s implication of unfairness, it is in fact the law that a court can (but is not required to, keeping in mind the general discretionary nature of awarding spousal support) award spousal support based at least in part on income received from property such as an IRA or pension which was awarded to one spouse during the divorce. The court may even do so if the paying spouse has not yet withdrawn income from the pension, IRA, or other income-producing asset in question.
Understand, however, that this rule works both ways, and income that a receiving spouse earns from a retirement asset that he or she receives in a divorce will be included in determining support. Meaning, the more income that that ex-spouse receives from that retirement asset, the less the amount of spousal support that that spouse will be awarded to be paid by the other spouse.
An important general takeaway with spousal support is to return to the central principle that judges do have a wide range of discretion in determining spousal support, whether at the initial divorce judgment or in a later modification, and it will be important to clearly present all material facts in accord with California state law to best pursue your financial interests, whether as a support payer or receiver.
Guidance on Your California Family Law Questions From a Westlake Village Family Law Attorney
If you would like to learn more about how our office can provide guidance on any California family law issues you are facing in Ventura County or Los Angeles County, contact the Zonder Family Law Group office today at (805) 777-7740 or (818) 877-0001, or schedule your strategy session using easy-to-use online form here.