Divorce, or dissolution of marriage, is the termination of the marital status . Whether contested or uncontested, every divorce is accompanied by several challenges that must be resolved before it is finalized. These may include custody of the children, payment of spousal and child support, and division of assets.
When a marriage ends, all properties, assets, and debts co-owned by the spouses are divided between them. While some couples can come to an understanding by themselves, others require the assistance of an attorney, mediator, or a family court judge.
Every state follows its procedure for dividing marital property. California is a community property state - where all income, debts, and assets acquired or earned during the tenure of the marriage are equally divided between the spouses, regardless of their employment status.
In this blog, we will dive deep into how assets are divided in California and the factors that determine their division.
How is Marital Asset Divided in California?
Being a community property state, California laws state that each spouse is entitled to 50% of the marital property.
Almost all income, properties, and assets acquired during marriage are considered community property and should be divided equally among the spouses. There are a few exceptions here, such as inheritance. Any property inherited by a spouse during the marriage won't be considered community property. This separate property will.be retained by the spouse to whom it belongs.
The employment status of the spouses doesn't matter. Even if one spouse made the money, the other will still be entitled to half. However, an equal division doesn't mean that every property will be divided in half. For example, if the couple owned assets worth $1,000, it would be divided $500-$500 between them upon divorce. The husband may get the house and the wife the business, but both spouses will get an equal share of their marital property.
Factors Affecting Property Division in California
Asset divisions are complex, especially if high net-worth assets are involved. Most often a financial valuation is required by an expert auditor to determine the exact value of the assets owned by both spouses. It is essential to understand the laws and regulations of California if you're going through an asset division case. Having an attorney is prudent here. They can help you understand the laws of the state governing property division and what to expect.
Here are the factors affecting community property division in California:
1. Difference Between Community and Separate Property
The first consideration is to distinguish separate property from community property.
Separate property refers to all assets, debts, and properties owned by the couple before their marriage or domestic partnership. Any inheritance or gift acquired by a spouse during marriage is also considered separate property. Any earnings or appreciation of the separate property is also not divided after divorce.
On the other hand, community property refers to all properties, assets, and debts acquired during marriage. These include:
- Bank account utilized by both parties, even if the account was opened before marriage
- Contributions made by both parties on mortgages, retirement accounts, and other expenses, even if they were established before marriage
- Any business established before the marriage and continuing after where both parties make contributions towards it
California law also allows the transfer of separate property to community property. This transfer is only valid when made in writing by both parties.
The date of separation of the spouses determines the cessation of community property. The date of separation is when one party decides to end the marriage or partnership. All assets, debts, and properties acquired after this date will be deemed separate property.
2. Total Value of Assets & Properties
California laws allow both parties to ascertain the value of community property during settlement negotiations. If the spouses cannot agree, the court will assign a value to each property. California laws state that the net value of every property is divided equally between the spouses, but this doesn't mean that every property is divided in half.
Assets are divided by assigning each item to one of the parties. The party can buy out the other party or divide the money after selling the asset or property.
Thus, one party may keep a car, while the other keeps the boat - as long as they both are equal in value.
3. Total Value of Debts
Not just assets and properties, debts like loans, mortgages, credit cards, etc. are also included for equitable division between the spouses or partners. Both parties have to continue to pay jointly owned debts to creditors, as the divorce agreement is not binding on creditors.
In cases where one party owes a debt that both parties jointly own, the other may request a lien to be placed on the separate property to secure repayment. Resolving debts before the finalization of divorce can simplify asset division.
4. Conversion of Properties
Property can be converted from separate to community and vice versa. This can happen when a property is gifted by one party to another, an agreement for transmutation of property is entered into by the parties, or if the property is jointly held by both parties.
Consult with an Attorney
Division of property is perhaps the most complex area of family law. Some properties may be complicated to divide or determine under community or separate property. During this time, consulting with an attorney can help you navigate through the process while ensuring that you get your fair share of assets and properties to secure your financial future.
The knowledgeable and experienced attorneys at Jos Family Law can guide you through divorce. We have a personalized approach to dealing with asset division and other family law disputes. Our attorneys understand your situation, address complex issues in your divorce, and prepare a tailored plan to achieve your goals.
Apart from asset division, several other issues in divorce need expert assistance. Our attorneys will make sure your rights and interests are protected and you are not taken advantage of at any time throughout the process.
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