Monday, April 11, 2011

Uncontested Dissolution of Marriage (Divorce): An Overview

Save a bundle on legal fees if your divorce is uncontested!


What does "uncontested" mean?
A dissolution of marriage (divorce) is uncontested if both spouses agree on the division of assets and debts, child custody arrangements and payment of child or spousal support. Most divorce cases are resolved in this manner, where the terms of property division, support and custody are addressed in a written Marital Settlement Agreement (MSA), and no trial is necessary. If your case is contested, please contact an attorney or certified family law mediator to ensure your rights are protected.


There are many advantages:


  • Save a bundle on legal fees

  • Quick, efficient court processes, requiring minimal, if any, court appearances (often no court appearance is necessary)

  • The MSA becomes part of your judgment; you essential get to write your own court orders

  • You maintain control of your entire case

Types of Uncontested Divorces


Uncontested Dissolution of Marriage
This is the typical uncontested divorce case. One spouse, the "Petitioner" files the Petition; the other spouse, the "Respondent" files a Response, or an Appearance, Stipulations, and Waivers form. Both spouses must pay a court filing fee (unless a fee waiver is granted due to financial hardship). Both spouses must exchange financial disclosures with each other, and both parties must sign the Marital Settlement Agreement. All required documents can be completed very quickly, so you get your judgment back as soon as possible.


Default Case with Written Agreement
This type of divorce is similar to the Uncontested Dissolution of Marriage, above. However, in this type of uncontested divorce case, the Respondent does not file any response with the court (thereby saving the Respondent's filing fee, which varies by jurisdiction but is typically around $400). A Default may take a bit longer than the above type of case, because the Petitioner must wait until at least 30 days after the Respondent is served with the Petition before filing the Default paperwork and submitting the final judgment packet and MSA to the court. Even though the Respondent makes no appearance, he or she still must exchange financial information with the Petitioner, and must sign the Marital Settlement Agreement.


True Default Case
In a true default case, the Respondent files no documents, makes no appearance in court, and does not sign a Marital Settlement Agreement. The Petitioner must prove to the court that the Petition and financial disclosures were served on the other spouse, and must file several other forms with the court. A hearing may be necessary with this type of divorce; but you can still proceed with the dissolution of your marriage, even if your spouse is totally non-responsive.


Factors Common to All Uncontested Divorce Cases


  • The earliest you can be legally deemed an "unmarried" person is six months plus one day from the date the Petition was served on the Respondent

  • If your documents are processed and the court judgment entered before that date, you may proceed with dividing assets, changing your name, and enforcing other provisions in your MSA; however, your marital status will not change from "married" to "unmarried" until the expiration of six months plus one day, or another later date as determined by both spouses or the court

Monday, January 24, 2011

Don’t be Fooled by Solicitations from Companies that Will “File” Your Annual Corporate Minutes (for a fee, of course)

After receiving a suspicious-looking solicitation on “official” letterhead bearing a Sacramento address, clients often ask:

“I got a form in the mail entitled “Disclosure Statement: Department of Annual Business Minutes (DOBM)” or “Annual Disclosure Statement” (or something similar), from a Sacramento address. It says I must fill it out and return it with a check for $125. Is this a scam? Do I need to do anything with my minutes on a yearly basis?”
Generally speaking, these are scams. I, myself, receive these solicitations several times a year. There are many companies out there that get an address somewhere in Sacramento (sometimes it’s just a mailbox store), and send envelopes with logos that somewhat resemble the official seal of the State of California, or they may look like they are from the Secretary of State’s office or the Department of Corporations. They generally tell you of some ill that will befall you and your business of you do not immediately sign the form and send it back with anywhere from $115 to $150 for annual minutes. You may receive such a solicitation within a few of weeks of filing your Articles of Incorporation.

Articles of Incorporation are public records, and these companies simply purchase lists of newly formed corporations. With so many small businesses incorporating every day, it’s like shooting fish in a barrel for them, and unfortunately their scare tactics work on a lot of people.

Here’s the real deal: Your corporation must have an annual meeting of the shareholders and an annual meeting of the directors. Meeting requirements are set forth in the Corporations Code and also in your corporation’s bylaws. These “meetings” do not have to be at a fancy conference location, and if your board of directors consists of just one person, you won’t exactly be “meeting” with yourself. But the meetings do have to be documented with minutes in your corporate record book. The bylaws further specify the requirements for the date and time of both the annual meeting of shareholders and the annual meeting of directors. In small corporations, these are usually handled as “paper meetings,” that is, minutes are generated documenting major decisions made that affect the corporation, but there is no actual “meeting” where folks sit down and conduct a discussion, etc. Failure to maintain an up to date corporate binder with all of the documents required in the Corporations Code and your bylaws (including minutes of these annual meetings) could potentially cause you to lose your corporate liability protection, and you may also be required to produce such documentation in the event you are ever audited by the tax authorities.

You can find an attorney or legal document assistant to prepare the necessary documents. However, these are all things you can do yourself, too. There are some easy-to-understand self-help books out there, like Nolo’s book on corporate resolutions. The Secretary of State will mail you a blank SOI form you can fill out and send back. But if you don’t want to hassle with it, we’re here to help.

Above all else, please understand that any solicitation you receive is likely a scam. Minutes do not get filed with the Secretary of State’s office; the only thing filed with the Secretary is the annual Statement of Information. Odds are, you will receive these bulk-mailed solicitations at various times of the year, often when you are nowhere near the annual meeting date established in your bylaws. Whatever services they are trying to sell you most likely won’t include the SOI, may not include the necessary notice waivers, and may not include the minutes of both meetings (shareholders and directors) as required in your bylaws.

Bottom line…buyer beware!

Wednesday, October 27, 2010

What is a Lis Pendens, and How Can I Record One if I am Not Represented by an Attorney?

A “notice of pendency of action,” also known as a “lis pendens” (Latin for “a suit pending”), is a written notice that a lawsuit has been filed that may affect either the title to, possession of, or a claimed ownership interest in real property. The notice is usually filed in the county Recorder’s office. Recording the notice alerts a potential purchaser or lender that the property’s title is in question, which can make the property less attractive to a buyer or lender.


For the purposes of this article, all code sections refer to the California Code of Civil Procedure, unless otherwise indicated.


The Underlying Action
A notice of pendency of action is available in actions involving “real property claims,” which are defined in California Code of Civil Procedure § 405.04 as “the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading, other than an easement obtained pursuant to statute by any regulated public utility.”


In addition, some types of cases require that a notice of pendency of action be filed:



  • At the time of filing a complaint in an action to reestablish lost land records. (§ 751.13.)

  • Immediately upon commencement of a quiet title action. (§ 761.010(b).)

  • Within 10 days after filing the complaint in an action concerning real property titles affected by public improvement assessments (§ 801.5.)

  • Immediately upon filing a complaint for partition of real property; if, thereafter, partition of other real property is sought in the same action, a supplemental notice is also required. (§ 872.250.)

  • At the time of the commencement of an eminent domain proceeding. (§ 1250.150.)

  • To give constructive notice of the pendency of an action involving a claim against the state for escheated property (§ 1355.)

  • In an actions involving the accession to real property, by the improver of such property, who acted in good faith, against the owner and encumbrances of record. (Civil Code § 1013.5(b).)

  • With the clerk of the probate court in an action to enforce a claim rejected by an executor or administrator of a decedent’s estate (Probate Code § 9354.)

  • Within 10 days of bringing an action by a purchaser to determine adverse claims to or clouds upon the title to tax deeded property (Revenue and Taxation Code § 3956.)

  • With the city or county treasurer in an action for recovery on an improvement bond (Streets and Highways Code § 6619.)

Recording Requirements
Unless otherwise specified, the notice must be recorded in the office of the Recorder of each county in which all or part of the property is situated. The notice must contain the names of all parties to the action and a description of the property affected by the action.


An attorney of record in an action may sign a notice of pendency of action. Alternatively, a judge of the court in which an action that includes a real property claim is pending may, on request of a party, approve a notice of pendency of action.


A notice of pendency of action may not be recorded unless: (a) it has been signed by the attorney of record, (b) it is signed by a party acting in propria persona and approved by a judge as provided in this section, or (c) the action is subject to § 405.6 (eminent domain).
Except in eminent domain actions under § 405.6, the claimant shall, prior to recording the notice, cause a copy to be mailed, by registered or certified mail, return receipt requested, to all known addresses of the parties to whom the real property claim is adverse and to all owners of record of the real property affected by the real property claim as shown by the latest county assessment roll.


Immediately following recordation, a copy of the notice shall also be filed with the court in which the action is pending. Service shall also be made immediately and in the same manner upon any adverse party later joined in the action.


Any notice of pendency of action shall be void and invalid as to any adverse party or owner of record unless the above requirements are met for that party or owner and a proof of service in the form and content specified in § 1013a has been recorded with the notice of pendency of action.


Undertaking
Generally, at any time after a notice of pendency of action has been recorded, the court may, upon motion by any person with an interest in the property, require the claimant to give the moving party an undertaking as a condition of maintaining the notice in the record title.


However, a person who is not a party to the action shall obtain leave to intervene from the court at or before the time the person moves to require an undertaking.


The court may permit evidence to be received in the form of oral testimony and may make any orders it deems just to provide for discovery by any affected party.


An undertaking required pursuant to this section shall be of such nature and in such amount as the court may determine to be just. In its order requiring an undertaking, the court shall set a return date for the claimant to show compliance and if the claimant fails to show compliance on the return date, the court shall order the notice of pendency of action expunged without further notice or hearing.


Expunging a Notice of Pendency of Action
At any time after notice of pendency of action has been recorded, any party, or any nonparty with an interest in the real property, may apply to the court to expunge the notice.


However, a person who is not a party to the action shall obtain leave to intervene from the court at or before the time the party brings the motion to expunge the notice.


Evidence or declarations may be filed with the motion to expunge the notice. The court may permit evidence to be received in the form of oral testimony, and may make any orders it deems just to provide for discovery by any party affected by a motion to expunge the notice. The claimant shall have the burden of proof under §§ 405.31 and 405.32.


The court must order the notice expunged if the court finds that the pleading on which the notice is based does not contain a real property claim, or the claimant has not established the probable validity of the real property claim (e.g. it is more likely than not that the claimant will obtain a judgment against the defendant).


The court may not order an undertaking to be given as a condition of expunging the notice where the court finds the pleading does not contain a real property claim, or finds that the claimant has not established the probable validity of the claim.


In expungement proceedings, the court shall order that the notice be expunged if the court finds that the real property claim has probable validity, but adequate relief can be secured to the claimant by the giving of an undertaking.


The expungement order must be conditioned on the giving of the undertaking of a nature and in an amount as will indemnify the claimant for all damages proximately resulting from the expungement that the claimant may incur if the claimant prevails on the real property claim.


In an expungement proceeding, the court shall direct that the party prevailing on any motion under this chapter be awarded the reasonable attorney's fees and costs of making or opposing the motion unless the court finds that the other party acted with substantial justification or that other circumstances make the imposition of attorney's fees and costs unjust.


Withdrawing the Notice of Pendency of Action
At any time after notice of pendency of an action has been recorded, the notice may be withdrawn by recording, in the office of the Recorder in which the notice of pendency was recorded, a notice of withdrawal executed by the party who recorded the notice or by the party’s successor in interest. This notice of withdrawal must be acknowledged.

Monday, October 25, 2010

Forming a California Non-Profit Public Benefit Corporation

In California, a non-profit organization that is incorporated to serve religious or charitable purposes is referred to as a “nonprofit public benefit corporation.” The legal requirements pertaining to these organizations are set forth in the California Corporations Code, beginning with § 5110. This article details the steps necessary to establish a California nonprofit public benefit corporation.

Laying the Groundwork
The philosopher Edmund Burke once said, “Good order is the foundation of all things.” In the spirit of Burke’s sage advice, we urge you to take your time with these preliminary steps, to ensure your new organization gets off to a good start with a solid foundation.

Direct your attention to your organization’s mission, funding sources, and annual budget. This is not the time to cut corners. Taking the time to write a mission statement that clearly identifies the needs your nonprofit corporation will address will assist you throughout the organization’s developmental stages, and will help you attract volunteers and donors.

Incorporate Your Nonprofit Organization
If you haven’t done so already, now is the time to choose name for the corporation and check the name availability with the California Secretary of State. Your organization’s name cannot be the same as, or deceptively similar to, other corporate names already on file (limited exceptions may apply).

You may also need to recruit directors to serve on your organization’s board. A California nonprofit public benefit corporation must have at least one director, and the number of directors must be stated in either the Articles of Incorporation or the corporate bylaws.*

Your Articles of Incorporation must be filed with the California Secretary of State. A filing fee is required; as of this writing that fee is $30. Current fees can be found on the Secretary of State’s website.

The Articles of Incorporation must contain specific language in order to qualify for tax-exempt status at the federal and state levels. Information about drafting the Articles of Incorporations, please consult California Corporations Code § 5130.

Once the Articles have been filed, you have 90 days to file a Statement of Information with the Secretary of State. This Statement is a public disclosure of information including a description of what the organization does, where it is located, and the names and addresses of its officers. After the original Statement is filed, you must file a new Statement of Information every two years. This Statement may be filed electronically via the Secretary of State’s website, or in paper format.

Draft Your Bylaws
The law requires that your organization adopt Bylaws, which are the internal governing document for your nonprofit corporation. The Bylaws establish the internal rules and procedures, including details about how business will be conducted, who has decision-making authority, and even the process by which the Bylaws can later be amended.

The Bylaws are not filed with any governmental entity, but must be kept with the organization’s corporate records at its principal place of business.

Hold an Organizational Meeting of the Board of Directors
The minutes from your Organizational Meeting of the Board of Directors will document the many of the remaining steps required to get your nonprofit organization up and running.
At this meeting, the incorporators and/or initial directors of the corporation will typically conduct the following business:


  • Appoint additional directors

  • Appoint or elect officers

  • Adopt the corporate Bylaws

  • Establish a budget

  • Designate a bank for the corporate account

  • Adopt a corporate seal

  • Set up a Corporate Record Book
Your corporate record book contains the important documents concerning the formation, management and due diligence of your nonprofit organization. Detailed information regarding recordkeeping requirements a nonprofit public benefit corporation must follow can be found in California Corporations Code §§ 6320-6325.

Get Your Employer Identification Numbers
Your nonprofit corporation must get a federal Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This can be obtained by phone, fax, mail or online application.
A California EIN is also required if your organization will be paying at least $100 in wages in a quarter. This EIN can be obtained online.

Apply for Tax Exempt Status
You will most likely want to apply for tax-exempt status with both the IRS and the California Franchise Tax Board (FTB). Without these exemptions, your organization may be obligated to pay at least the minimum federal and state corporate income tax.

The federal tax exemption under section IRC § 501(c)(3) is requested using IRS Form 1023, Application for Recognition of Exemption. This form may not be required, however, if your organization was established with a 501(c)(3) purpose and your annual gross receipts are normally less than $5,000.

California state tax exemption is requested on FTB Form 3500, Exemption Application. If you have already obtained a letter of determination from the IRS, you can apply to the FTB using the shorter Form 3500A, Submission of Exemption Request, and attaching a copy of the federal letter. These forms can be downloaded from the FTB’s website.

Register with the California Attorney General
Once your nonprofit public benefit corporation begins receiving donations, you must file the Initial Registration Form CT-1. This form must be filed with the Registry of Charitable Trusts within 30 days.

* Note: Under California law, no more than 49 percent of a board of directors may be interested persons. An interested person is a director who provides nondirector services to the nonprofit public benefit corporation and is paid for the services rendered. The law also extends to cover any close relative of the director. For more information, see California Corporations Code § 5227.

Monday, July 6, 2009

FAQ: Should I Incorporate My Business?

The primary advantages of operating as a corporation are liability protection and potential tax savings. Like any important decision, choosing whether to incorporate involves weighing the pros and cons, and should only be done after careful research and consultation with a legal or tax professional.

Once incorporated, the business assets of the corporation are separated from the owner’s personal finances. As a result, the owner’s personal assets generally can be shielded from creditors of the business.

To maintain this legal separation (and avoid “piercing the corporate veil”), the corporation must observe certain formalities, including:


  • Keeping corporate assets and personal assets separate (no commingling of funds)

  • Holding shareholder and director meetings at least annually

  • Maintaining a corporate record book including bylaws, minutes of shareholder and director meetings, and shareholder records

  • Filing annual information statements with the Secretary of State

  • Filing a separate tax return for the corporation

Many people are concerned about “double taxation” of income, but you should do your own research, and compare the features of the C-corporation and S-corporation. The double taxation results when a C-corporation has profit at the end of the year, and that profit is then distributed to the shareholders. That profit is taxed to the corporation, at the corporate tax rate, and then the dividends are taxable income to the shareholders on their personal tax returns. However, the corporate tax rate is typically much lower than the individual tax rate that a sole-proprietor will pay on a 1040 Schedule C, and a competent accountant can help the corporation minimize double-taxation (or eliminate it completely).

For example, a small C-corporation will likely have a shareholder who is also an employee. Paychecks to the shareholder/employee are, of course, tax deductible to the business. To the shareholder/employee, they are taxable income (as would be the case with a paycheck from any employer). A bonus could be paid to the shareholder/employee in order to lower the corporation’s taxable profit, eliminating the double-taxation. These calculations should be performed by your accountant or tax advisor, but shifting income from the corporation to the shareholder/employee (or vice versa, depending on which has the lower tax rate) can be a great way to lower your overall tax liability. In addition, there are certain advantages that are only available with a C-Corporation, such as full tax-deductibility of medical benefits for a shareholder/employee.

The S-Corporation avoids the double-taxation by offering a tax structure similar to the Limited Liability Company (LLC, which is not an option for businesses that are required to hold a license, certification or registration). A corporation with 100 or fewer shareholders can elect to be treated as an S-Corporation. If the corporation is profitable, the shareholder/employee must draw a reasonable salary (and pay employment tax on it), but then all remaining corporate profits flow through to the shareholder’s personal tax return (thereby avoiding the FICA tax on the portion of profits that is taken as a dividend).

Before deciding to incorporate, you should seek legal and tax advice on what type of ownership best suits your business. An experienced attorney and tax advisor can help you decide which form of ownership is best for your business. For the do-it-yourselfers, we highly recommend “Own Your Own Corporation” by Garrett Sutton, Esq. (part of the Rich Dad series).

Saturday, June 27, 2009

What is a Notice of Pendency of Action
(Lis Pendens)?

A “notice of pendency of action,” also known as a “lis pendens” (Latin for “a suit pending”), is a written notice that a lawsuit has been filed that may affect either the title to, possession of, or a claimed ownership interest in real property. The notice is usually filed in the county Recorder’s office. Recording the notice alerts a potential purchaser or lender that the property’s title is in question, which can make the property less attractive to a buyer or lender.


A notice of pendency of action is available in actions involving “real property claims,” which are defined in California Code of Civil Procedure § 405.04 as “the cause or causes of action in a pleading which would, if meritorious, affect (a) title to, or the right to possession of, specific real property or (b) the use of an easement identified in the pleading, other than an easement obtained pursuant to statute by any regulated public utility.”


Unless otherwise specified, the notice must be recorded in the office of the Recorder of each county in which all or part of the property is situated. The notice must contain the names of all parties to the court action and a description of the property.


An attorney of record in an action may sign a notice of pendency of action. Alternatively, a judge of the court in which an action that includes a real property claim is pending may, on request of a party, approve a notice of pendency of action. Such a request is usually made in the form of an ex parte application. Both the notice and the ex parte application are routine legal documents that you can prepare yourself, with a little help from the law library, or a non-attorney legal document preparer can assist you.

Saturday, March 21, 2009

Federal Courts React to Tide of Pro Se Litigants

From The National Law Journal

In response to a growing tide of pro se litigants in federal courts, legal centers in at least three districts have been set up to provide services and advice to parties who represent themselves in civil cases.

The newest center opened on March 5 at a federal courthouse in downtown Los Angeles. Last year, a similar one opened in the federal courthouse in San Francisco. A third program, operating out of the federal courthouse in Chicago, has been operating since 2006.

The centers reflect the increasing number of pro se litigants in federal courts, particularly in employment and certain types of civil rights lawsuits.

"It's part of a whole movement that's taking place in the courts to try to recognize, as a practical matter, that most people just can't afford lawyers these days," said Richard Zorza, coordinator of the Self Represented Litigation Network, which works with organizations on pro se litigant issues.

About 150 centers exist nationwide to assist pro se litigants, but most are part of state courts and vary from clinics to telephone hotlines to online resources, Zorza said. "It's certainly unique doing it in federal court," he said.

Unlike state courts, where pro se litigants frequently show up in divorces, the vast majority in federal court appear with employment claims, such as violations of the Americans With Disabilities Act and other anti-discrimination statutes.

The new pro se centers focus on civil cases and, for the most part, litigants who are not prisoners. The services are free. At the Pro Se Clinic in Los Angeles, which covers the Central District of California, a poster advertising its services in the courthouse lobby already had drawn up to 15 people a day before its official opening on March 5, said Janet Lewis, supervising attorney of the clinic.

Lewis works for Public Counsel, a nonprofit legal organization that operates the clinic, which came about after judges grew frustrated with pro se litigants.

Many of their problems are procedural. "The complaints are not put together in a way so that the court actually feels comfortable they can use them," she said.

Lewis is one of two attorneys in the clinic who provide legal advice, review briefs or refer litigants to pro bono attorneys, said HernĂ¡n Vera, president of Public Counsel. But they stop short of writing briefs or appearing in court.

In San Francisco, the Legal Help Center, sponsored by the Bar Association of San Francisco's Volunteer Legal Services Program, opened in September.

"Often, there are people who are misguided in terms of not really understanding what the cause of action is, and what's recognizable, and the fact that they don't have a viable cause of action for one reason or the other," said U.S. Magistrate Judge Edward Chen of the Northern District of California, who came up with the idea of the clinic. "Often, people do have a cause of action but are at a loss as to how to prosecute their case."

He said the court has a handbook available to help pro se litigants with terms. But the handbook doesn't explain legal theories, he said.

Unlike attorneys at the other two centers, the supervising attorney of the San Francisco clinic, Jennifer Greengold, can give limited legal advice and write pleadings. But she can't go to court and can't do outside research for pro se litigants.