When an airline offers a frequent-flyer program it allows members to accumulate miles. The miles begin to obtain value to the program member despite being only a medium you can trade for free travel. The member doesn’t truly care about the miles. He cares about the benefit of accumulating those miles, free travel. The medium, in this case, frequent flyer miles, truly has no value yet still draws the concentration of the program member. “The money we earn from work is also a medium. Thus, the potential implication of research on medium is not medium; it is extra large.” Christopher Hsee, Journal of Consumer Research, June 2003 

The tenet of Medium Maximization says people often fail to fully skip over the medium (frequent flyer miles) in favor of the benefit (free travel). For example, consider the opening scene to the film Wedding Crashers. The scene concentrates on a divorcing couple in the midst of a Divorce Mediation session. They begin arguing over who should be awarded the frequent flyer miles. Frequent flyer miles and other frequent buyer or cash back rewards programs are considered by family law courts to be a community asset in California. The husband says “I earned those miles”, the wife seems to agree but believes he earned them on trips to see his -insert expletive- girlfriend. The miles are the medium to this couples’ financial decision-making process (dispute). By focusing on the medium (frequent flyer miles) rather than the benefit (free travel) of owning the medium, they have both failed to consider the decision at hand from a rational perspective. The real decision at hand is who will be awarded the right to free travel in the future not who gets the frequent flyer miles. The value of this free travel can be estimated fairly easily. Twenty-five thousand (25,000) miles might earn a one way ticket from Los Angeles to New York while the same ticket would actually cost $300. The wife lost sight of the benefit of the miles immediately when she associated the medium with the outcome in her mind, her cheating husband. She has missed the point by concentrating on the medium rather than the benefit.

The wife is very clearly upset by the situation and allows her emotions into the decision making process. I don’t blame her. The point of the illustration is to realize that economic theory tells us people will never concentrate on the medium because it has no value. The emotional turmoil of the dispute in the movie tells us humans often place a value on the medium and may ultimately make emotional decisions because of their tendency for medium maximization. Understanding Behavioral Finance can help mitigate emotion but we can never hope to completely remove it making Behavioral Economics vital to appreciating real life financial decision-making especially in Divorce Financial Planning.

Justin A. Reckers can be reached at:

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Justin A. Reckers can be reached at:

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53% of Judges reported they had seen an increase in cases. The most common increase was foreclosures at 61% followed by domestic relations (read divorce) cases at 49%. The report states “There has long been an ackowledged link between the economy and divorce rates, as economic issues tend to put the greatest amount of pressure on a marriage.”   

Judges were asked if they had seen a change in representation in their court-rooms in 2009. 60% reported seeing a greater number of self represented parties. 62% of these judges believe not having an attorney negatively impacted the outcomes for self represented parties. The judges unanimously noted failure to present necessary evidence as the most common problem. Close to 90% noted the negative impact of procedural errors and more than 80% noted ineffective witness examination and failure to properly object to evidence. Several judges even noted that pro-se litigants were not able to offer an enforcable order even after winning at trial.

The survey offers incredible insight into the self represented litigant and their effect on the court system from using more resources of court staff to slowing procedures to compromising the integrity of the court. Read a story on the findings in the American Bar Association Journal and the full text of the survey here.

Justin A. Reckers can be reached at:

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Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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Colleagues of mine, Jim and Tony Dunne of Dunne and Dunne Family Law, recently won a reversal of an interesting property division issue on appeal to the Fourth Appellate District of California. The case was certified for publication and Filed December 1^st 2009. Following is my summary of the details and important points.

The couple, Tatia Buie (Wife) and Walter Neighbors (Husband), were married in 1999. During the marriage, Husband purchased a 2001 Porsche 996 using a check written from Wife’s bank account. Wife’s bank account held funds derived from the sale of her separate property residence. Husband argued the $60,000 expended for the Porsche was a gift since the purchase occurred in close proximity to his birthday. The family court agreed with Husband at trial and actually awarded the Porsche to him as his Separate Property.

Ms. Buie disagreed with the Family Court decision and appealed contending 1) the Porsche was community property and 2) that she was entitled to reimbursement under section 2640 for the use of her separate property funds to acquire the Porsche on behalf of the community.

The appeal court ruled there was no transmutation from community property to Husband’s separate property citing there had been no express declaration of intent to gift the property to Husband. Transmutation of real or personal property is not valid unless made in writing by the spouse whose interest is adversely affected. According to the appeal court, there are sections of California code that allow for gifts to be made from spouse to spouse without express written documentation but they must be a “tangible article of a personal nature” and not be “substantial in value”.

The appeal court found 1) that there was no evidence of a written document stating intent to gift the Porsche and 2) the automobile did not fall under the definition of “tangible article of a personal nature”. They did not discuss the issue of substantial value in their decision but I imagine it would be easy to convince the court a Porsche carries substantial value.

In short, the Court of Appeal concluded the Family Court had erred in awarding the Porsche to Husband as his separate property and therefore must be included as community property.

Ms. Buie went on to argue that she should be reimbursed as part of the division of the community estate for her separate property funds used to purchase the Porsche since it was confirmed as a community asset. Section 2640, subdivision (b) provides: “In the division of the community estate under this division, unless a party has made a written waiver of the right to reimbursement or has signed a writing that has the effect of a waiver, the party shall be reimbursed for the party’s contributions to the acquisition of property of the community property estate to the extent the party traces the contributions to a separate property source.” I am often hired to provide the necessary tracing to prove or refute such a claim. Wife was able to prove that 100% of funds used to purchase the Porsche were her separate property and the Court of Appeal ruled she had a right to reimbursement of the separate property funds under section 2640. They did not render opinion as to how much the reimbursement should be. That is a question for another day.

Justin A. Reckers can be reached at:

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Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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How does the Collaborative Divorce Process Function?

A Collaborative Process is a lot like a Charter Airplane Service.  The “airplane” is co-owned by a highly trained, diverse group of professionals whose different areas of expertise are all required to operate the plane efficiently and safely. Collaborative clients are the passengers.  Our passengers come to us because they want to get to a different place in their relationship with each other.  As long as their destination is one of the routes we service, we are happy to take them on their journey.  There are some destinations that we will not travel to, and passengers seeking to go to those destinations will have to find another carrier. 

Our passengers select their own flight crew often starting from a list of the owner-operators of the plane and ultimately selecting their specific crewmembers with the different areas of required in-flight expertise.  The passengers have a great deal of input into the flight plan. Do we take a longer, perhaps more scenic route?  Do we take a faster, more direct route? How many layovers will we make along the way? Like any good charter operator, we consider our passengers’ input and recommend a flight plan that best meets their needs while conforming to safety rules and standards of operation.  The passengers then decide if they agree with the flight plan.  If they don’t, we refer them to other carriers.

There are other variables that will affect the journey. The baggage the passengers bring with them will impact the flight.  Heavy passenger baggage may consume more fuel, slow the plane down and make the trip more expensive, but as long as the passengers understand this and are willing to be patient and bear the increased cost, the professional team can complete the journey and transport the passengers to their desired destination.   

Bad weather or turbulence may require a course adjustment.  Our passengers are always consulted about this.  If they decide they are up to it, and if we think the airplane is strong enough, we may decide to keep our seat belts buckled and fly directly through it.  Sometimes we need to land, refuel, settle the passengers’ (or our own) nervous stomachs, and re-take off when the weather has improved. 

Our passengers hire us for our expertise in flying our plane.  They expect us to be at the controls at all times, and we should be.  There is no automatic pilot on this plane, and expecting there to be leads to disaster.  We can’t expect our passengers to take the controls, as they do not know how to fly our plane- that is why they came to us.

There are rules that apply to our charter flights, and these rules must be complied with.  Our passengers are not allowed to hijack the plane to try and send us towards a non-agreed upon, or unsafe destination.  Neither passenger is allowed to grab the controls to steer us off course or put the plane into a catastrophic tailspin. When we put the fasten seat belt light on, everybody has to buckle up.  Our passengers have to help keep our plane clean.  Cigarettes or other inflammatory materials cannot be used on board.

Our passengers have to provide each other and us with all the information that we need to make sure that the journey goes safely.  There can’t be any surprises such as finding out after take off that one of the passengers did not inform of us of dangerous cargo hidden in his/her baggage.  Such things can be dealt with safely as long as we know about it beforehand.  Every flight involves some turbulence, and getting through it requires that our passengers honestly express their concerns, trust our judgment, and at times defer to our expertise about what is required to fly the plane safely.

There are risks to operating a charter airline.  Few flights go completely smoothly and not every flight ends well.  Sometimes passengers decide that they made a mistake in choosing our airline, because they really want to fly to a different destination that we can’t or won’t serve.  When that happens, we end the trip early and safely escort the passengers off our plane and try to help them find an airline that will better serve their needs. 

Sometimes one or both of the passengers are not willing to comply with our in-flight rules. Sometimes this is unintentional and merely requires further explanation to help the passengers behave in accordance with our safety standards.  Some passengers though, are just not willing to comply with the rules.  When this happens, we have to land the plane prematurely, keep it on the ground, and escort the passengers off the flight, so that we and our airplane are not put in harm’s way.  When a flight ends, even if it ends prematurely, the passengers will take their baggage with them, but the flight plan and flight records stay with the flight crew. 

Ours is a very elegant aircraft, and it requires a great deal of mindful maintenance.  The passengers have to help us keep the inside of the plane clean, but it is our responsibility to keep the plane operating safely and smoothly.  This requires a great deal of coordinated effort during each flight. Sometimes clients may question whether or not the crew needs to do so much work during a flight, or whether or not each crewmember is really needed, but when it comes to flying the plane safely, ultimately those are our decisions to make. It is important after each flight concludes, that we get together with each other to debrief about the flight and talk about how we can improve our service and improve our airplane.

So how does Collaborative Process function?   The clients define their destination and together with their chosen professional team decide if the process is the right vehicle for them to reach their destination.  The clients own their final settlement decision-making, and they own their behavior, but the process, “the airplane” is owned by the professional team.  Our clients step into it at the start of their journey and step out of it at the journey’s conclusion.  Above all else it is the responsibility of the professional team to maintain “the airplane’s” structural integrity, so that Collaborative clients can be transported to the intended destination- a healthier divorce.

By Pete Roussos, MFT, www.peterroussos.com

Check out the Collaborative Divorce section of my website for more on the revolutionary no-court divorce option.

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Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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Justin Reckers, Certified Financial Planner, Certified Divorce Financial Analyst and Managing Director of Pacific Divorce Management  has joined Licensed Marriage and Family Therapist, Nancy Fagan of The Divorce Help Clinic and attorney Shawn Weber of Brave, Weber and Mack to develop a monthly workshop/seminar to help Men prepare for and cope during the divorce process and thrive afterwards. Here Justin and Nancy are featured on San Diego Fox 5 Morning News speaking with Raoul Martinez about the “Walk Away Wife” trend, No-Fault Divorce in California and Divorce Financial Planning tips including Negotiating the Family Home and the “Marriage Severance Package”. Our interview highlights upcoming Men’s Divorce Seminars and Workshops we offer in San Diego.

Go to The Divorce Help Clinic website http://www.thedivorcehelpclinic.com/menonly.html to sign up for upcoming workshops.

Justin A. Reckers can be reached at:

Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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Epstein Credits are most commonly incurred when one party pays community debts using their spearate property income.

If you are claiming the credit. – Keep your receipts, bank statements and other records. It is common to see divorce proceedings last years and create a long trail of records. Large bills pile up quickly for financial experts if they must recreate the paper trail.

Seek professional advice if you believe you need to consider this during your divorce.

Justin A. Reckers can be reached at:

Our firm does not provide legal or tax advice. Be sure to consult with your own tax and legal advisors before taking any action that would have tax consequences. The information provided herein is obtained from sources believed to be reliable; but no representation or warranty is made as to its accuracy or completeness.

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