One of the biggest stress factors in a California divorce is how assets and debts are ultimately divided. It is difficult to imagine all your hard work that went into acquiring your belongings only to have them divided between you and your spouse; many times, not knowing which spouse will end up with what assets.
Perhaps you are the breadwinner and fear which items will no longer be yours. Maybe you are a stay at home parent and fear losing the family home. Regardless of your situation, it is imperative that you hire a skilled and experienced divorce attorney. Your divorce attorney can intelligently explain marital property law, advise you on how to reach a compromise with your spouse, and preserve your rights throughout the process.
If you have anything of value, this also signals a necessity to hire a divorce attorney. Below we will discuss important concepts related to marital property division as well as provide easy to understand explanations of the process.
What Does California Consider To Be Property?
Before we begin to discuss the complicated world of community property division, it is important to first understand what qualifies as property. The simplest form of defining property is anything that can be bought or sold, such as:
- A house
Property can also be defined as anything that holds value, such as:
- Bank accounts
- 401K Plans
- Life Insurance
- A Business
These types of assets must be divided either through a Marital Settlement Agreement or a court order. Even if these assets are divided by spouses using a Marital Settlement Agreement, the court must still sign off on the agreement.
Summary: Anything of value, or anything that was purchased or can be sold is considered property in a divorce proceeding. Examples of property include furniture, pensions, and bank accounts.
What Is Community Property?
California is what is known as a community property state. This means that a partnership between two partners makes one legal community estate. So, anything acquired during marriage, but prior to separation, is known as community property. In addition, any debt acquired during marriage, but prior to separation, is known as community debt.
The types of assets acquired during marriage varies. It includes anything you or your spouse purchased or received during the marriage, however it does not include anything received as a gift or through inheritance.
Community property also includes all monetary earnings through any source of income, and anything purchased with those earnings. A quick way to determine whether an asset is community property is by looking to the source of the funds used to purchase the asset.
Determining community property debt is very similar. If the debt was acquired during the marriage, then it is community debt. This debt will be characterized as community property even if only one spouse incurred the debt.
In California each spouse owns one half of the community property and is responsible for one half the community debt.
Summary: Two married people form one legal community estate. Community property is anything acquired during marriage but before separation. Community property includes both assets in the marital estate and debts, which is owned by each spouse jointly and equally.
California Property Division & Financial Disclosures
A great way to begin thinking about dividing your marital estate is to work with your divorce attorney in completing the required financial disclosure documents. Your financial disclosure documents require you to list every single asset and debt in the community estate.
This list will show you and your spouse in black and white all the items that need to be divided and their monetary value. This way both parties have a clear understanding about the items up for negotiation.
In California, financial declarations are mandatory. The financial disclosure forms must be exchanged between the parties so there is complete transparency as to each asset and debt the couple shares and is aware of. Failure to fill out the forms fraudulently in an effort to hide assets may result in sanctions from the court.
There are three important forms that are part of the financial declaration process and should be filled out with the help of your divorce attorney. These forms provide the greatest understanding of the marital estate. These forms include:
- Declaration of Disclosure – FL-140
- Schedule of Assets and Debts – FL-142
- Income and Expense Declaration – FL-150
Summary: Financial disclosures are a great way to understand what community assets you and your spouse have acquired over the years and is a great way to begin negotiations.
Dividing The Marital Estate
There are a couple different ways you and your spouse can choose to divide your marital estate when going through a divorce proceeding. Typically, in California, assets and debts should be divided equally. It is very rare that a judge would sign off on a division of assets agreement if the division is heavily swayed in favor of one spouse.
Your divorce attorney is a great asset when negotiating the assets and debts you wish to have assigned to you. Your divorce attorney can act as a mediator, or a “liaison”, assisting in negotiating on your behalf while also offering other assets that can be assigned to your spouse. Having your attorney act as mediator helps reduce stress, take the emotions out of the process, and help you understand which assets and debts would benefit you the most.
If you are unable to come to an agreement with your spouse about how to divide the marital estate, then you typically must appear in court for either a hearing or long cause hearing, which is like a mini-trial. The judge in your case will add up the values of all your assets and typically split everything down the middle.
Here’s an example. If you and your spouse have two bank accounts, the judge will not take half of the value in one account and half of the value of the other account and dispense it to you. Instead, a judge is more likely to compare the values in each account and assign one account to one spouse and the other account to the other spouse. If one account has a greater value, then the judge will typically make up that shortfall be assigning extra furniture, 401-K value, or a car with a higher value.
Debt can also be used to balance out division of assets. If one spouse is given an expensive set of china plates and fine silver, the judge may also choose to assign a credit card with debt owed on the card. Remember, the goal of property division is that you and your spouse end up with roughly the same amount of assets and debts.
Summary: The goal of property division is to make sure each party receives a fair and equal amount of both assets and debts. Using an experienced divorce attorney as a mediator can help ensure you structure a fair and equitable settlement. If you are not able to come to an agreement outside of court, a judge will make a determination as to how the community property assets and debts are divided by conducting a trial.
The Family Home
The family home is one of the biggest sources of contention, especially if you have children. It is possible that one spouse retains ownership of the family home, however the other spouse will then receive comparable amount of assets in exchange. It is also plausible for the spouses to choose to sell the family home and split whatever profit is derived from the sale.
When children are involved, most courts will typically award the family home to the primary custodian of the children. Consistency and stability for children is valued in the family court system. By allowing the primary custodian to stay in the family home, the children will be able to stay where they are comfortable and familiar.
Summary: There are several ways the courts handle division of the family home, however most importantly, the courts ensure children can remain in the family home with the primary custodian. The court values consistency and stability when making decisions on child custody and the family home property ownership determination.
Call Now To Speak To An Experienced Divorce Attorney That Can Help You Protect Your Property
If you are beginning the divorce process and are concerned about how your marital property will be divided between you and your spouse, it is important to speak to a qualified divorce attorney right away. An experienced divorce attorney can help reduce stress pertaining to your case, provide expert guidance through the process, and effectively advocate on your behalf.
The divorce process does not have to be overwhelming or unpleasant. Call me today, Bruce A. Mandel, today to schedule your consultation with a caring and supporting divorce attorney.
2790 Skypark Drive
Torrance, CA 90505