Interesting Idea for Spousal Support

According to the IRS, Spousal Support is not deductible on your Federal Taxes, nor is the income received from support taxable on your Federal Taxes; however, California does not follow the IRS on this; SS is deductible and taxable in CA.

Mortgage Interest, however, is deductible, and if you are a mortgage holder, the interest you receive is taxable.

On of my clients is proposing placing a first trust deed on the House, payable over 15 years, non-assignable, and with no prepayment penalty. This arrangement would allow the mortgagor to itemize and essentially deduct part of the spousal support in another form. The mortgagee would pay taxes on the interest received, and the mortgagor could deduct the interest payments on their taxes. The note will be a $300,000 15-year fully amortized loan at 6.0% with a monthly payment of about $2500.

Spousal Support

14 Factors List

How long you were married
Your age and health
Your incomes
What you’re capable of earning (called earning capacity)
Your standard of living while married
How much property or debt you each have
Whether one of you helped the other get an education, training, career, or professional license
Need and ability to pay
Assets assigned after divorce
The impact of tax laws on spousal support
If there was a history of abuse during your marriage
Any other factor the judge should consider

If you have children together:

How caring for children impacted either of your careers
How working now will impact your children

California Family Code

FAMILY CODE - FAM

DIVISION 9. SUPPORT [3500 - 5700.905]

( Division 9 enacted by Stats. 1992, Ch. 162, Sec. 10. )

PART 3. SPOUSAL SUPPORT [4300 - 4360]

( Part 3 enacted by Stats. 1992, Ch. 162, Sec. 10. )

CHAPTER 3. Spousal Support Upon Dissolution or Legal Separation [4330 - 4339]

( Chapter 3 enacted by Stats. 1992, Ch. 162, Sec. 10. )

4330.

(a) In a judgment of dissolution of marriage or legal separation of the parties, the court may order a party to pay for the support of the other party an amount, for a period of time, that the court determines is just and reasonable, based on the standard of living established during the marriage, taking into consideration the circumstances as provided in Chapter 2 (commencing with Section 4320).

(b) When making an order for spousal support, the court may advise the recipient of support that the recipient should make reasonable efforts to assist in providing for their support needs, taking into account the particular circumstances considered by the court pursuant to Section 4320, unless, in the case of a marriage of long duration as provided for in Section 4336, the court decides this warning is inadvisable.

4331.

(a) In a proceeding for dissolution of marriage or for legal separation of the parties, the court may order a party to submit to an examination by a vocational training counselor. The examination shall include an assessment of the party’s ability to obtain employment based upon the party’s age, health, education, marketable skills, employment history, and the current availability of employment opportunities. The focus of the examination shall be on an assessment of the party’s ability to obtain employment that would allow the party to maintain their marital standard of living.

(b) The order may be made only on motion, for good cause, and on notice to the party to be examined and to all parties. The order shall specify the time, place, manner, conditions, scope of the examination, and the person or persons by whom it is to be made.

(c) A party who does not comply with an order under this section is subject to the same consequences provided for failure to comply with an examination ordered pursuant to Chapter 15 (commencing with Section 2032.010) of Title 4 of Part 4 of the Code of Civil Procedure.

(d) “Vocational training counselor” for the purpose of this section means an individual with sufficient knowledge, skill, experience, training, or education in interviewing, administering, and interpreting tests for analysis of marketable skills, formulating career goals, planning courses of training and study, and assessing the job market, to qualify as an expert in vocational training under Section 720 of the Evidence Code.

(e) A vocational training counselor shall have at least the following qualifications:

(1) A master’s degree in the behavioral sciences, or other postgraduate degree that the court finds provides sufficient training to perform a vocational evaluation.

(2) Qualification to administer and interpret inventories for assessing career potential.

(3) Demonstrated ability in interviewing clients and assessing marketable skills with an understanding of age constraints, physical and mental health, previous education and experience, and time and geographic mobility constraints.

(4) Knowledge of current employment conditions, job market, and wages in the indicated geographic area.

(5) Knowledge of education and training programs in the area with costs and time plans for these programs.

(f) The court may order the supporting spouse to pay, in addition to spousal support, the necessary expenses and costs of the counseling, retraining, or education.

4332

In a proceeding for dissolution of marriage or for legal separation of the parties, the court shall make specific factual findings with respect to the standard of living during the marriage, and, at the request of either party, the court shall make appropriate factual determinations with respect to other circumstances.

4333.

An order for spousal support in a proceeding for dissolution of marriage or for legal separation of the parties may be made retroactive to the date of filing the notice of motion or order to show cause, or to any subsequent date.

4334.

(a) If a court orders spousal support for a contingent period of time, the obligation of the supporting party terminates on the happening of the contingency. The court may, in the order, order the supported party to notify the supporting party, or the supporting party’s attorney of record, of the happening of the contingency.

(b) If the supported party fails to notify the supporting party, or the attorney of record of the supporting party, of the happening of the contingency and continues to accept spousal support payments, the supported party shall refund payments received that accrued after the happening of the contingency, except that the overpayments shall first be applied to spousal support payments that are then in default.

4335.

An order for spousal support terminates at the end of the period provided in the order and shall not be extended unless the court retains jurisdiction in the order or under Section 4336.

4336.

(a) Except on written agreement of the parties to the contrary or a court order terminating spousal support, the court retains jurisdiction indefinitely in a proceeding for dissolution of marriage or for legal separation of the parties where the marriage is of long duration.

(b) For the purpose of retaining jurisdiction, there is a presumption affecting the burden of producing evidence that a marriage of 10 years or more, from the date of marriage to the date of separation, is a marriage of long duration. However, the court may consider periods of separation during the marriage in determining whether the marriage is in fact of long duration. Nothing in this subdivision precludes a court from determining that a marriage of less than 10 years is a marriage of long duration.

(c) Nothing in this section limits the court’s discretion to terminate spousal support in later proceedings on a showing of changed circumstances.

(d) This section applies to the following:

(1) A proceeding filed on or after January 1, 1988.

(2) A proceeding pending on January 1, 1988, in which the court has not entered a permanent spousal support order or in which the court order is subject to modification.

4337.

Except as otherwise agreed by the parties in writing, the obligation of a party under an order for the support of the other party terminates upon the death of either party or the remarriage of the other party.

4338.

In the enforcement of an order for spousal support, the court shall resort to the property described below in the order indicated:

(a) The earnings, income, or accumulations of either spouse after the date of separation, as defined in Section 70, which would have been community property if the spouse had not been separated from the other spouse.

(b) The community property.

(d) The other separate property of the party required to make the support payments.

4339.

The court may order the supporting party to give reasonable security for payment of spousal support.

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