Who gets the rings in a divorce?

(Revised and republished 02/21/2017)

During a divorce I am often asked, “Who gets to keep the rings?”

Couples understand that in a divorce their property is going to get divided.  Maybe it will be by settlement or it may be by trial. One of the largest pieces of property in many marriages is often the wedding or engagement ring.

Occasionally, one of the parties may want the rings sold simply to keep it from the other. So who do the rings really belong to?   Often, it depends on which ring you are asking about.

The Rule on Gifts

The basic Rule on Gifts is: the giver (or gifter) must transfer personal property voluntarily and without expecting something in return. The gifter transfers personal property simply by delivering it to the recipient. A gift is given ‘voluntarily’  if it is fairly certain there is no force or coercion put on the giver and the recipient didn’t take the gift without permission. The trickier part is whether or not ‘consideration’ (a thing or promise in return) is implied when the rings are given.

Engagement Rings

California doesn’t view engagement rings as gifts.  Rather engagement rings are given for the other person’s promise of marriage, the consideration (CA Civil Code section 1590). If the couple actually marries, the recipient (normally the bride) has completed her promise.  The engagement ring is now hers. When the parties divorce, the engagement ring, having become the bride’s property before marriage, remains her separate property and wouldn’t be divided as part of the divorce.

If the wedding doesn’t happen, then it who gets the ring depends on who broke the engagement off.  If the recipient, she has to return the ring.  If it was the gifter, the recipient can keep the ring.

Wedding Rings and Anniversaries

Unfortunately wedding bands and rings bought after the wedding day (anniversary rings, upgraded rings, etc.), aren’t as clear cut as engagement rings. The rules of marital property and conversion of property from one type or another (called “transmutation”) have to be taken into account.

Wedding bands purchased before the wedding day and given at the ceremony are the property of the buyer until the wedding. The spouses aren’t married and their money is separate. At the wedding each buying spouse gives (transfers) a wedding band to the other spouse voluntarily. But is there consideration?  Are wedding rings given for a promise to stay married?

Normally, the original wedding bands are treated as an exchange of gifts while the wedding is a separate exchange of promises. This makes sense if we think of couples that can’t afford a wedding ring or the cost of different couples’ rings. If a couple doesn’t have a wedding ring are they not married after the ceremony? That wouldn’t be fair. If one couple can afford a very expensive ring is their promise to stay married stronger than a couple who can only afford an inexpensive band? Also ridiculous.

The treatment of the original wedding bands as gifts isn’t stated that way in the statutes.  There is no settled law on the issue. However, if the rings were treated as an exchange for being married that would be a contract that would appear to trade personal servitude or sex for a gift of an asset and would be patently illegal.

Just to muddy the waters further is the exception in the law for gifts between spouses.  When jewelry is given as a gift that is meant for the exclusive use of one of the spouses, that is not considered under community property “that is not substantial in value taking into account the circumstances of the marriage”.  What this last part means, is that to determine if there is an exception to gifts between spouses, we have to look at the value of the rings in comparison to what the spouses could afford and to their station in life.

Later Purchased Rings

So what about rings that are bought after the wedding day? This often happens at anniversaries or when renewing vows.  It can also happen when couples are doing better financially and want to upgrade the original rings.

The purchase of rings or other jewelry during marriage would most likely be from earnings during the marriage.  This implies it is community property money. The rings could then be considered community property.

But can the rings be considered a gift from one spouse to the other? California Family law requires that transmutation – the conversion of community property to separate property – requires a writing signed by the gifting spouse. However, we return to that exception which excludes jewelry used solely or principally by the spouse to whom the gift is made and that is not substantial in value.

Therefore, when it comes to rings purchased after the marriage, whether the rings are gifts will be a judgment issue based on if the rings are of “substantial value”, taking into account the rest of the marital circumstances (value and income). The smaller percentage of the total value both at purchase and divorce will be the most likely measuring points.

Seek Help from an Experienced Attorney

Dividing marital property can be a tricky affair. The loss of family heirloom rings and finding a “fair” middle ground can be difficult.  Emotions are running high at this time while you are trying to negotiate. A skilled attorney can help work through the issues with you and reduce the contention during this most trying time.


Featured Image: “Aboutgmaxdmdns by Chapter1Design” at wikicommons

Stationery Store Wills May Cost More Than You Know

 

(Updated 2/20/2017)

When the modern printing press was invented, a printer spent his days mass producing Bibles.  I’m willing to bet he could make a lot of dough kicking out fill-in-the-blank Wills at night.

Your Office-Store Will May Cost Your Family a Small Bucket of Money

The purpose of a store-bought Will is to save money.  There’s nothing new about legal forms.  Templates are as old as paper.  In some pyramid, there’s probably a sheet of papyrus that had a disclaimer in hieroglypics that said “No warranty – use at your own risk”.

Without proper drafting, however, your penny saved could cost your estate and your family a good bucket of dollars.

The Executor’s and Administrator’s Bond

Family members are often the people appointed to handle court probates for their deceased parents or siblings.  These family members are regularly required to post a bond, a type of money guarantee, with the Court.  A bond is insurance that the Executor or Administrator (we’ll stick with the term Executor here), will properly execute his duties and not mismanage the estate assets.

Executors must qualify financially to get a bond issued.  As is often the case, the less financially stable the Executor, the higher the bond’s cost, if it’s approved at all.   The cost of the bond comes from the estate and can very easily cost in the thousands each year that the estate is in probate. The Court will permit the Executor to recover the cost of the bond from your estate, but that reduces the money that is meant for your family.

Bond companies often require that the Executor be represented by an attorney. Adding the attorney will most surely mean doubling the probate fees.

Money Well Spent is Money Saved

Hiring an attorney to review and draft your Will costs a bit more than buying it off the shelf.  The price may rise from $25 to $200 in some cases.  However, for that small additional cost, your attorney can properly draft the necessary clauses to reduce or remove the need for a bond at all.  This small expense can save your family thousands in the end.

Featured Image: Printing Press, 1829 woodcut by George Baxter on WikiCommons

Creating Your First Policies and Procedures Manual

(Revised and Republished 2/22/2017)

McDonalds is touted as an example of what every small business should strive for.  Every action, every activity, every day is based on documented and tested policies and procedures that turn the business into a well oiled machine.  But how do you get there?

New employees need to be trained. Existing employees need to perform tasks with the same level of quality each time. Updating business practices to comply with changed laws need to be communicated and all employees need to be trained on the changes.  All this comes from a working set of policies enshrined in your procedures manual.

Every business is made up of processes.  Every task in a service oriented or product based businesses can be broken down into various steps.  Receiving mail, responding to client or customer inquiries, paying bills, even taking phone messages are all procedures. These tasks may need to be done every day or only when required.  But whenever needed, the process can be performed repeatedly and can be measured.

What is a Policy and What is a Procedure?

A Procedure is the list of steps necessary to accomplish a task.  The Policy is the collection of principals and reasoning behind the steps in the Procedure.  Why a certain set of procedures is chosen is based on the business needs and decisions of your practice or shop.  The policies need to be based on your operating choices and the legal, regulatory, or administrative requirements of your field.  A complete listing or analysis of policies is beyond the scope of this article but evolves in your own business like a second skin.

What Makes a Good Procedure?

Plain and simple, a good procedure is just a list of repeatable steps that drive consistent quality with very short explanation.

In my experience, the best step is one that you can explain in one breath.  The step should be an action not an explanation.  Separating the policy from the procedure allows you to explain the reasoning of the policy apart from the actionable steps needed to accomplish the task at hand.

A good example of a step for receiving mail would be “1. Enter the sender name, address, and date of receipt into the mail log for today’s date.”  The policy might be “all incoming mail should be tracked and an index reviewable.”  If the step is clear and unambiguous, then it can withstand the test of training.  A clear policy allows you to measure if the steps accomplish the goal of the policy.

Creating Your First Procedure

In my previous career I was a software engineer and architect.  In that role I spent countless cycles turning business needs into software.

The process is often a translation of the business practice into a repetitive function that can be performed and tested.  The method was always the same: find the best person to perform the task, watch them do it, and determine how to repeat it correctly.  Break down their tasks into discreet steps and documenting each one is the key to the method.

The person to observe is called a subject matter expert (“SME”) – someone who is the most skilled and knowledgeable to perform the task and explain it to someone else.

Testing Your Procedure Out

The only way to test the procedure is to execute it against test data.  In the case of a business procedure, that means repeating the steps with a non-expert, the Tester.  The SME and the Tester each becomes quality control.  The job of the Tester is to insure that the procedure is clear and comprehensible.  The SME insures the accuracy of the procedure itself.

If the procedure is unclear, have the SME redefine the task so that the Tester can clearly understand it.  If the result is inaccurate, determine the failing and have the SME retrace the steps with the Tester to locate the defect.  Finally, re-execute the procedure and repeat until accurate.

Do remember that no one and no procedure is perfect.  It may be that the SME themselves needs to improve.

Refining the Policies and Procedures

Business practices that do not evolve can be the slow death of a business.  A practice that is not efficient drains the company resources.  A practice that fails to comply with the legal, regulatory, or administrative requirements can result in costly fines, lawsuits, or termination of the business itself.

Once documented, a policy and procedure is ripe for refinement.  The SME, business owner and legal counsel can review the policy as it changes over time or the business needs evolve.  Once the policy is in place, the SME can retrace the procedure to achieve the policy’s goal.

Draft, retest, repeat.

A Template for Documenting Policies and Procedures

Policy/Procedure Number:

Policy: [Descriptive explanation of the particular policy behind this procedure.  This should include the who, what, when and why of the policy, and save the how for the Procedures section below.]

SME Name: [List the person to contact for questions regarding implementation of the procedures.]

Definitions: [If there are specific definitions that are unique to the procedures, or if everyday words are defined in a specific way, they should be listed before the procedural steps are expressed.]

Procedures:

[List each step in a way that can be stated in short, actionable steps.  If there are potential splits based on different conditions, you can use a “jump” such as “3. If the piece of mail is a bill for payment goto step 7”.]

Featured Image:Red Checkmark by Johannes Rössel from WikiCommons

U.S. Supreme Court – Warrant Required for Cellphone Search

Although we don’t practice criminal law, as a proponent of privacy rights I think everyone needs to be aware of the U.S. Supreme Court’s unanimous decision that requires a warrant to search cell phones during an arrest.

Today’s cell phones & tablets store entire histories of our lives. Pictures, passwords, bank accounts, financial records, social security numbers; not to mention our calendars, notes, phone numbers and things we store in Evernote, Facebook, and Dropbox. Our “smart” devices aren’t just a treasure trove to thieves but also to law enforcement who may or may not have a valid right to access them.

Search and Seizure and Miranda Rights

If you’re arrested or detained by a law enforcement officer, your rights under Miranda allow you to remain silent.  But your cellphone in your pocket or on the seat next to you, can do a lot of talking!

Police were using historical exceptions to perform searches without a warrant to search your phone as far back as 2010. Stop & frisk – where police can search you before questioning you, public school searches, or searches of cars during arrest and detainment, were all used by the police as excuses to search through smart devices. The police could peruse and find anything they could on cell phones. That data could create really damaging results.

As far back as 2011, attorneys have been advising people to add passwords and other access controls to their smart devices. Under Miranda, your right to remain silent protected you from having to answer questions about your password. The police couldn’t force you to tell them the password or access control without a warrant and your right to remain silent was your greatest tool.

Riley vs California (U.S. Supreme Ct 13-132 6/25/2014) and Wurie vs California (U.S. Supreme Ct 13-212 6/25/2014)

Police in two separate California cases used data from cellphones to convict or seek more serious convictions against the owners. During both trials the defendants tried to suppress the use of the cellphones as illegal searches, but the California Courts held that the cellphone data was admissible.

Now, The Supreme Court has ruled that search warrants should have been required to search through smart data.

The Court clearly stated its understanding that modern cellphones with their vast amount of storage can store years worth of data. That data doesn’t stand alone. Like a letter or picture found in a wallet it interrelates with other material. A picture may be just a picture. But on a smart device that picture along with emails, texts, stored documents and the like provide a much more correlated picture than just a single item.

The Court also recognized that data visible on a smart device can be stored on a remote server. Although not specified by the Court, clear recognition that the phone is an access point for storage sites like Evernote, Facebook, Dropbox, SkyDrive for example, creates a far greater extension of the limits of the data available.

The Court held that the police can’t generally search digital information on a cell phone seized during an arrest without a warrant. “The warrant requirement is an important component of the Court’s Fourth Amendment jurisprudence, and warrants may be obtained with increasing efficiency.” (Justice Roberts).

It is notable that in an emergency or exigent case that SCOTUS did reserve the right to permit the cell phone’s search without a warrant. The same requirement for the police to prove the exigent circumstance will still apply.

Although we’d still recommend using passwords and access controls to your smart devices, it’s a very welcome recognition by SCOTUS that the importance of privacy rights have to be balanced against the needs of law enforcement.


Featured Image: Arrested by Nathan Rupert on Flickr

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Word Soup – Settlor, Grantor, or Trustor

This is the first in a new series of articles titled “Word Soup”, dedicated to the Hon. Patrick T. Meyers, Judge of the Los Angeles Superior Court. In my opinion a fine judge and also a lexophile – someone with an interest in the meaning and origins of words.

Judge Meyers and his court reporter had the unenviable luck to to draw a libel case a few years ago. The case involved some very horrible social media statements made by old fraternity brothers on a public alumni forum. The challenge involved deciphering at least five different Filipino dialects, and a proposed list of over twenty native speakers as “lay-experts”.

During the case, the good judge emphasized to all the importance of precision in words. It was that precision that in the end decided much of the case in my opinion. I think it’s fitting that a series on word origin and meaning should be named in his honor.

Settlor, Grantor, or Trustor – What’s my line

Clients may often hire lawyers amend trust documents prepared by other attorneys. Last week I was asked the difference between the use of “Settlor” and “Trustor” in the trust.

I explained that these were treated, for most intents and purposes, as the same thing. She asked if there was then a Settlee, Grantee, and Trustee. I replied, “Yes”, but that there are actual subtle differences.

SETTLOR: (n) the grantor or donor in a deed of settlement. 1, a writing. Although the use has fallen away from other areas outside of probate law and trust planning, a settlor could be any person who settles his ownership rights. With regard to trust planning, the creator of the trust is settling the ownership of property placed into the trust.

GRANTOR: (n) the person by whom a grant is made.2 A grant was a transfer of property that could not be transferred by a simple ceremony of handing it to the grantee, the recipient. In modern speech, it refers to the transfer of property that, by law, requires a transfer of title in writing. Real property fits this bill, as do certain financial accounts.

TRUSTOR: (n) a word occasionally though rarely used [then], as a designation of the creator, donor, or founder of a trust.3 The Trustor, a very common word now, refers to the person who creates the trust itself, placing something of value in the hands of the Trustee, the new owner who holds the property for the benefit of a Beneficiary.

Serving Up The Soup

When creating a revocable or irrevocable trust, you actually are a Settlor, Grantor, and Trustor, all in one. You are settling the rules of your ownership rights by granting the ownership of the property and its benefits through the process of creating the trust and entrusting the property to the Trustee. Although we normally use only one name to refer to you in the trust document, all of these actions are taking place.

Dessert

So are there then Settlees, Grantees, and Trustees? Well, yes, in a manner. A settlee is someone for whose benefit a settlement is made. A grantee, on the other hand, is the recipient of the property in the grant, and may not necessarily be for his benefit. And finally, a trustee is the person who holds property for the benefit of another.

Trusts normally only name Beneficiaries, and Trustees. The Beneficiary is named to define what benefits from the trust are given. The Trustee is the other party to the trust who has all of the duties stated. While there may be different roles involved, these are the persons, businesses, or things, who need to be named as they have active parts to play.

References
  • 1“Settlor” Black’s Law Dictionary Third Edition. Third Edition 1933. Print
  • 2“Grantor” Black’s Law Dictionary Third Edition. Third Edition 1933. Print
  • 3“Trustor” Black’s Law Dictionary Third Edition. Third Edition 1933. Print
  • Note: Old School Dictionary Used On Purpose