PROPERTY CHARACTERIZATION & DIVISION
Moore-Marsden is about who gets what equity and debt from the marital home in a divorce when the home was purchased before marriage by either one spouse or, in some cases, both spouses. The Marriages of Moore and Marsden are the bases for the calculation used to apportion the separate and community property interests (characterization). It is calculated using the purchase price and appraisals of the home and elements of Family Code Section (FC) 2640. However, the analysis does not apply when the home was purchased during marriage. If there is no appreciation during marriage, then only the funds used to acquire the home are reimbursed. The Moore-Marsden calculation also applies to commercial property (Marriage of Frick).
LA & OC: MOORE-MARSDEN FORMULA & CALCULATION
The formula is straightforward. It works well when the marital home was never refinanced. In fact, you do not need to pay a forensic accountant since there are many Moore-Marsden calculators on the internet. If you have a divorce attorney, their software (CFLR Propertizer or Xspouse) has the calculator. However, the calculator or worksheet is not for complex Moore-Marsden cases even though the formula is the same. Therefore family law attorneys and mediators hire forensic accountants to perform the analysis instead of using their calculators. However, many forensic accountants add elements to the formula, which could have hugely different results and create unnecessary litigation. Greg had a case in Los Angeles County where the other expert witness testified that the community had zero interest in the home's appreciation during marriage despite it's contributions toward the acquisition. He argued that the line of credit erased 100% of the community's contribution. The court disagreed and used Greg's opinion instead.
MORTGAGE REFINANCING & REIMBURSEMENT CLAIMS
Refinancing the marital home and changing its title (transmutation) often complicate the characterization and division of the marital home (Marriage of Branco). Separate property contributions toward the acquisition of the home during marriage also adds to the complexity since they may require tracing from a source of funds acquired before marriage or earned from separate property during marriage. The contributions toward the acquisition during marriage are presumed community property. The spouse claiming separate property for contributions during marriage can rebut the presumption, but the burden of proof is on them. It is common for one or even both spouses to live in the marital home after separation, especially with higher unemployment from COVID-19. This living arrangement complicates the reimbursement claims (Watts charges and Epstein credits or Watts-Epstein) when mortgage payments are paid by either spouse after they separate.
FAIR MARKET VALUE IS IMPORTANT IN DIVIDING PROPERTY
The market values at the date of marriage and the date closest to trial are important and are sometimes controversial if there are wide differences between real estate appraisers. The appreciation before marriage belongs to the owner of the marital home at marriage (Marriage of Marsden). Whereas, the pro-tanto appreciation during marriage belongs to the community (Marriage of Moore). The Marriage of Branco alters the apportionment of the appreciation during marriage. The (fair) market value at either date of valuation is important since it can "swing" the appreciation to favor the separate property claimant or the community. While improvements to the home before or during marriage affect the value of the home, they may also affect reimbursement claims (FC 2640). In some cases, the age of the property improvement is relevant in the claim.
COVID-19 ASSISTANCE: FIXED-FEE MOORE-MARSDEN
In a time of unprecedent health and financial crises, we are offering a fixed-fee Moore-Marsden calculation for cases where the marital home was refinanced multiple times. For simple cases, you can use an online Moore-Marsden calculator, or you can use this worksheet. There are many calculators with case examples on the internet. If you have a divorce attorney or mediator, they can analyze the separate and community property interests. Their family law software has the calculator. Please call Greg to discuss your case and his analysis.